Nylan Company Is Considering an Investment in New Equipment Costing

question 104

Multiple Choice

Nylan Company is considering an investment in new equipment costing $850,000. The equipment will be depreciated on a straight-line basis over a five-year life and is expected to have a salvage value of $50,000. The equipment is expected to generate net cash inflows of $1,000,000 in total during the five years life. What is the accounting rate of return associated with the equipment investment?

• A)9.99%
• B)8.89%
• C)7.56%
• D)9.32%

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