Reference no: EM132571904

June Co. is evaluating a project requiring a capital expenditure of $620,000. The project has an estimated life of four years and no salvage value. The estimated net income and net cash flow from the project are as follows:

Year                       Net Income              Net Cash Flow
1                         $45,000                       $200,000
2                        85,000                             240,000
3                         5,000                              160,000
4                        15,000                              170,000
5                      150,000                                $770,000

The company's minimum desired rate of return is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively.

Question a. Determine the average rate of return on investment, giving effect to depreciation on the investment. Round your answers to two decimal places.

Question b. Determine the net present value.