A Company Projects an Increase in Net Income of $225,000

question 186

Multiple Choice

A company projects an increase in net income of $225,000 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) 25.0%
• B) 37.5%
• C) 50.0%
• D) 57.5%

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Definitions:

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