[The Following Information Applies to the Questions Displayed Below

question 89

Multiple Choice

[The following information applies to the questions displayed below.]
Newport Corporation is considering investing $65,000 in equipment to produce a new product.The useful service life of the equipment is estimated to be ten years,with no salvage value.Straight-line depreciation is used.The company estimates that production and sale of the new product will increase net income by $6,500 per year.
-The expected rate of return on average investment in this equipment is:

• A)15%.
• B)20%.
• C)7.5%.
• D)Some other percentage.

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Definitions:

Median

A measure of central location provided by the value in the middle when the data are arranged in ascending order.

Uniform Distribution

A type of probability distribution in which all outcomes are equally likely.

Probability Density Function

An equation that indicates the probability of a random variable occurring at a certain value.

Interval

In mathematics, this refers to a range of numbers between two defined points, which can be either open or closed at each end.