Amigo Mobility, which manufactures battery-powered mobility scooters, has $700,000 to invest. The company is considering three different battery projects that will yield the following rates of return:
Deep cycle = 28%
Wet/flooded = 42%
Lithium ion = 19%
The initial investment required for each project is $200,000, $100,000, and $400,000, respectively. If Amigo’s MARR is 15% per year and it invests in all three projects, what rate of return will the company make?
200,000(0.28) + 100,000(0.42) + 400,000(0.19) = 700,000(x)
x = 0.249 (24.9%)
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