(Ignore Income Taxes in This Problem

question 88

Multiple Choice

(Ignore income taxes in this problem. ) An expansion at Fenstermacher,Inc. ,would increase sales revenues by $315,000 per year and cash operating expenses by $186,000 per year.The initial investment would be for equipment that would cost $405,000 and have a 5 year life with no salvage value.The annual depreciation on the equipment would be $81,000.The simple rate of return on the investment is closest to:

• A)31.9%
• B)15.2%
• C)20.0%
• D)11.9%

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Definitions:

Waiting Time

The duration of time until a specific event occurs.

Sample Mean

The average value of a sample set of numbers, calculated by adding all the values together and dividing by the number of values.

Confidence Interval

An interval estimate used to infer the reliability of a parameter estimate, such as a mean or proportion, within a population.

Population Mean

The average value of a population attribute.