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Determine the average rate of return

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T.K. Company Limited intends to set up a fruit processing plant in Mukono.  It is estimated that the investment will cost Shs.1600m.  Depreciation will be 20% on a straight line basis over 6 years of useful life of the plant. Tax is 15% per Anum of the profit. The projected earnings are before depreciation and tax are: -

Year                            Profits before tax

  1                                            20m
  2                                            40m
  3                                            50m
  4                                            60m
  5                                            30m
  6                                            80m

Determine the Average Rate of Return (ARR) for the project

Reference no: EM133070248

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