Considering the purchase of capital investment costing

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Reference no: EM131215679

Big Al's is considering the purchase of a capital investment costing $15,000. Annual cash savings of $5,000, with a present value at 15 percent of $18,923, are expected for the next six years. Given this information, which of the following statements is true?

This investment offers an actual rate of return of 15%.

This investment offers an actual rate of return of less than 15%.

This investment offers an actual rate of return of more than 15%.

This investment offers a negative rate of return.

Reference no: EM131215679

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