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North End Co. is considering a new project which will earn $325,342 of total income over...


North End Co. is considering a new project which will earn $325,342 of total income over the next five years. The cost to start the project totals $525,200, and it will have a $21,343 salvage value. Calculate the average rate of return for the project, rounding percentages to the nearest whole percentage.

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T S325,342 otal earned ncome Salvage vaue S21,343 Total cost of project - S525,200 Average rate of return = (Total earned income Salvage value ) / Total cost of project - (S325,342 S21,343) S525.200 - S346,685 / S525,200 - 0.660100914 = 66.0100914 % 66.01 % Average annual rate of return-66.01 % * 1/5-1 3.202 % Per annum Ans : Average annual rate of return-13.202 %

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