Determine unadjusted rate of return based on average cost

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Reference no: EM131296218

Norman Rentals can purchase a van that costs $78,000; it has an expected useful life of three years and no salvage value. Norman uses straight-line depreciation. Expected revenue is $39,221 per year. Assume that depreciation is the only expense associated with this investment.

Required

a. Determine the payback period. (Round your answer to 1 decimal place.)

b. Determine the unadjusted rate of return based on the average cost of the investment. (Round your answer to 1 decimal place. (i.e., .234 should be entered as 23.4).)

Reference no: EM131296218

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