Problem:
A project has an initial cost of $150,000 and an estimated salvage value after 13 years of $90,000. Estimated average annual receipts are $27,000. Estimated average annual disbursements are $16,000.
Assume that annual receipts and disbursements will be uniform; compute the prospective rate of return before taxes. Elucidate in detail and specify all computation and methods.
A) 4.6%
B) 5.8%
C) 3.5%
D) 5.1%