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Determine the expected average rate of return

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Reference no: EM131811450

Questions -

1. What are the principal objections to the use of the average rate of return in evaluating capital investment proposals?

2. Discuss the principal limitations of the cash payback method for evaluating capital investment proposals.

3. The following data are accumulated by ChemLabs, Inc. in evaluating two competing capital investment proposals:

Testing Equipment

Vehicle

Amount of investment $90,000

$25,000

Useful life 6 years

8 years

Estimated residual value 0

0

Estimated total income over the useful life $24,300

$15,000

Determine the expected average rate of return for each proposal.

Reference no: EM131811450

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