The Average rate of return is 35%.
The cash payback period is 4.10 years.
<h3>What is the average rate of return?</h3>
Average rate of return is a capital budgeting method. It is used to determine if a firm should invest in a project or should not invest in a project
Average rate of return = average net income / average cost of investment
average net income =$570,720 / 6 = $95,120
Average cost of investment =( beginning book value of the investment - ending book value of the investment) / 2
(603,500 - 52,500) / 2 = $275,500
Average rate of return = ($95,120 / $275,500) x 100 = 35%
<h3>What is the cash payback period?</h3>
Payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative cash flows
Payback period = Amount invested / cash flow
Payback period = 123,000 / 30,000 = 4.10 years
To learn more about the payback period, please check: brainly.com/question/25716359
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