Average Rate of Return
ABC LTD is considering two mutually exclusive projects requiring an initial cash outlay of 10,000 each and with a useful life of 5 years. The company required rate of return is 10%. Cash flows are given as follows:YEAR 1 2 3 4 5Project A 3,000 3,000 3,000 3,000 3,000Project B 4,000 2,500 2,000 3,500 3,500Required:Calculate for each projecti. The payback periodii. The average rate of returniii. The net present valueiv. Profitability indexv. The internal rate of returnFor more information on Average Rate of Return check on:https://en.wikipedia.org/wiki/Accounting_rate_of_return
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