Project #77538 - Accounting

a company is considering two mutually exclusive projects requiring an initial cash outlay of Sh 10,000 each and with a useful life of 5 years.  The company required rate of return is 10% and the appropriate corporate tax rate is 50%.  The projects will be depreciated on a straight line basis.  The before depreciation and taxes cashflows expected to be generated by the projects are as follows.

 

                   YEAR                          1                 2                 3                  4                 5

                   Project A           Shs 4,000           4,000           4,000            4,000           4,000

                   Project B           Shs 6,000           3,000           2,000            5,000           5,000

 


Determine the average rate of return 

Subject Business
Due By (Pacific Time) 07/29/2015 12:00 am
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