Make capital budgeting decision using average rate of return

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Two investment proposals are submitted for approval of $25,000 each in initial investment. Their estimated profits after taxes are:

Year Proposal 1 ($) Proposal 2 ($)
1 2,500 6,000
2 3,300 4,900
3 4,000 4,200
4 5,200 3,150
5 6,100 2,000

Make a capital budgeting decision using the average rate of return method.

Reference no: EM131307164

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