Average Rate of Return MethodNet Present Value Method and Analysis
The capital investment committee of Cross Continent Trucking Inc. is considering two capital investments. The estimated income from operations and net cash
flows from each investment are as follows:
Each project requires an investment of $620000. Straight-line depreciation will be used and no residual value is expected. The committee has selected a rate
of 15% for purposes of the net present value analysis.
Required:
1a. Compute the average rate of return for each investment. If required round your answer to one decimal place.
1b. Compute the net present value for each investment. Use the present value of $1 table present above.