Reference: 10-02
Oriental Company Has Gathered the Following Data on a Proposed

question 20

Multiple Choice

Reference: 10-02
Oriental Company has gathered the following data on a proposed investment project: $$\begin{array} { | l | l | } \hline \text { Investment in depreciable equipment } & \$ 200,000 \\\hline \text { Annual net cash flows } & \$ 50,000 \\\hline \text { Life of the equipment } & 10 \text { years } \\\hline \text { Salvage value } & \$ 20 \\\hline \text { Discount rate } & 10 \% \\\hline\end{array}$$ The company uses straight-line depreciation on all equipment.
-The simple rate of return on the investment would be:

• A)25%.
• B)35%.
• C)10%.
• D)15%.