The following data are accumulated by Green Mountain Testing Services Inc. in evaluating two competing capital investment proposals:
|
|
Testing Equipment |
Centrifuge |
|
Amount of investment |
$34,000 |
$40,000 |
|
Useful life |
6 years |
8 years |
|
Estimated residual value |
0 |
0 |
|
Estimated total income over the useful life |
$10,200 |
$14,000 |
Determine the expected average rate of return for each proposal.