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Determine the Average Rate of Return for a Project That

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Essay

Determine the average rate of return for a project that is estimated to yield total income of $250,000 over 4 years,cost $480,000,and has a $20,000 residual value.


Definitions:

Future Value

The future valuation of an asset or cash that has the same worth as a particular sum at present.

Present Value

Today's value of a future financial amount or series of cash disbursements, based on an agreed-upon rate of return.

Discount Rate

The discount rate applied to project the present value of future cash flows from a financial instrument.

Invest

Committing financial resources with the hope of income or profit generation.

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