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CAM Co. is evaluating a project requiring a capital expenditure of $619,200. The project has an estimated life of four years and no salvage value. The estimated net income and net cash flow from the project are as follows:

Year	Net Income	Net CashFlow
1	$ 65,000	$240,000
2	92,000	260,000
3	100,000	160,000
4	52,600	70,000
	$309,600	$730,000
	========	========

The company's minimum desired rate of return is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is.893, .797, .712, and .636, respectively.

Determine: (a) the average rate of return on investment, giving effect to depreciation on the investment, and (b) the net present value.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9797736

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