(Ignore Income Taxes in This Problem

question 73

Multiple Choice

(Ignore income taxes in this problem.) The management of Wiersema Corporation is investigating purchasing equipment that would increase sales revenues by $257,000 per year and cash operating expenses by $103,000 per year. The equipment would cost $430,000 and have a 5 year life with no salvage value. The simple rate of return on the investment is closest to:

• A) 15.8%
• B) 20.0%
• C) 26.5%
• D) 35.8%

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Definitions:

Formal Parameter

A variable specified in the method declaration that accepts the value passed to the method during its invocation.

Milliseconds

A unit of time equal to one thousandth of a second, commonly used in computing and time measurements.

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