2) What is the accounting rate of return for a project that is estimated to yiel

Question

2) What is the accounting rate of return for a project that is estimated to yield total income of $363,000 over three years and costs $850,000? (Round your answer to 2 decimal places. (i.e. .1234 should be entered as 12.34%.))

3) A project has estimated annual net cash flows of $62,000 and is estimated to cost $365,800. What is the payback period? (Round your answer to 2 decimal places.)

Accounting Rate of Return %

3) A project has estimated annual net cash flows of $62,000 and is estimated to cost $365,800. What is the payback period? (Round your answer to 2 decimal places.)

Payback Period Years

Explanation / Answer

2)Accounting rate of return =Average income /Investment

            = [363000/3]/850000

            = 121000/850000

           = .1424 or 14.24% annually

3)payback period = Initial cost/cash flow

    = 365800/62000

    = 5.9 years

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