A Company Projects an Increase in Net Income of $135,000

question 11

Multiple Choice

A company projects an increase in net income of $135,000 each year for the next five years if it invests $900,000 in new equipment. The equipment has a five-year life and an estimated salvage value of $300,000. What is the annual rate of return on this investment?

• A) 15.0%
• B) 22.5%
• C) 30.0%
• D) 34.5%

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Definitions:

Sense of Well-being

A feeling of health, happiness, and prosperity, often considered as a holistic understanding of one’s physical, psychological, and social health.

Financial Strain

A condition of experiencing stress due to inadequate financial resources or difficulties in managing financial obligations.

Financially Independent

The state of having sufficient personal wealth to live, without having to work actively for basic necessities.

Launched

The act of starting or initiating something, such as a product in the market or a spacecraft into orbit, often with a formal event or announcement.