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Compute the annual rate of return expected on this project

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Reference no: EM131821930

Question - A company is considering purchasing factory equipment which costs $960,000 and is estimated to have no salvage value at the end of its 8-year useful life. If the equipment is purchased, annual revenues are expected to be $450,000 and annual operating expenses exclusive of depreciation expense are expected to be $190,000. The straight-line method of depreciation would be used. If the equipment is purchased, the annual rate of return expected on this project is:

A. 54.2%.

B. 29.2%.

C. 27.1%.

D. 14.6%.

Reference no: EM131821930

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