Two investment proposals are submitted for approval of $25,000 each in initial investment. Their estimated profits after taxes are:
| Year |
Proposal 1 ($) |
Proposal 2 ($) |
| 1 |
2,500 |
6,000 |
| 2 |
3,300 |
4,900 |
| 3 |
4,000 |
4,200 |
| 4 |
5,200 |
3,150 |
| 5 |
6,100 |
2,000 |
Make a capital budgeting decision using the average rate of return method.