Cary Swenson is considering investing $30,000 in a project with the following cash revenues and expenses:
$\begin{array}{lll}&&\text { Cash Expenses \& }\&\text { Revenues }&\text { Depreciation }\
\text { Year 1 } & \$ 10,000 & \$ 12,000 \
\text { Year 2 } & \$ 12,000 & \$ 11,000 \
\text { Year 3 } & \$ 15,000 & \$ 12,000 \
\text { Year 4 } & \$ 20,000 & \$ 12,000 \
\text { Year 5 } & \$ 22,000 & \$ 12,000 \
\text { Year 6 } & \$ 25,000 & \$ 15,000 \
\text { Year 7 } & \$ 25,000 & \$ 15,000 \
\text { Year 8 } & \$ 25,000 & \$ 15,000
\end{array}$
-Refer to the Figure.What is the average income for the project?

Question

Cary Swenson is considering investing $30,000 in a project with the following cash revenues and expenses:
 $\begin{array}{lll}&&\text { Cash Expenses \& }\&\text { Revenues }&\text { Depreciation }\
\text { Year 1 } & \$ 10,000 & \$ 12,000 \
\text { Year 2 } & \$ 12,000 & \$ 11,000 \
\text { Year 3 } & \$ 15,000 & \$ 12,000 \
\text { Year 4 } & \$ 20,000 & \$ 12,000 \
\text { Year 5 } & \$ 22,000 & \$ 12,000 \
\text { Year 6 } & \$ 25,000 & \$ 15,000 \
\text { Year 7 } & \$ 25,000 & \$ 15,000 \
\text { Year 8 } & \$ 25,000 & \$ 15,000
\end{array}$
-Refer to the Figure.What is the average income for the project?

Quizplus · Accepted Answer

The average income is calculated by taking the total cash revenues minus total cash expenses and depreciation, divided by the number of years. Total cash revenues are $154,000, total cash expenses are $0, and total depreciation is $104,000. The average income is ($154,000 - $104,000) / 8 = $6,250.

Cary Swenson Is Considering Investing $30,000 in a Project with the Following