Dickerson Co The Company's Minimum Desired Rate of Return Is 12

Dickerson Co. is evaluating a project requiring a capital expenditure of $810,000. The project has an estimated life of 4 years and no salvage value. The estimated net income and net cash flow from the project are as follows: $$\begin{array} { c l l } \text { Year } & \text { Net Income } & \text { Net Cash Flow } \\1 & \$ 75,000 & \$ 285,000 \\2 & 100,000 & 290,000 \\3 & 109,000 & 190,000 \\4 & { 36,000 }& { 125,000 } \\& { \$ 320,000 } &{ \$ 890,000 }\end{array}$$ 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.
Determine the average rate of return on investment, including the effect of depreciation on the investment.

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$320,000/4 = $80,000...

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