The rate of return of the project is 30.36%
Explanation:
Cash flow generated for the first three years= $ 237,600 each of the three year
Cash flow generated for the 4th year= $ 274,800
Initial cost of the project= $ 757,600
The return rate of the project?
For finding the return rate of the project, we need to find the total cash flow generated by the project for the complete period (i.e. 4 years)
⇒Total cash flow generated= cash flow for 3 years+ cash flow for 4th year
⇒$ (237,600*3) +$ 274,800
⇒$ 987,600
Return from the investment=$ 230,000
⇒Rate of return= (return/total investment) *100
Substituting the values-
⇒(230,000/757,600) *100
⇒30.36%
The rate of return of the project is 30.36%
