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What is the average rate of return on the investment

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Reference no: EM132524126

Question 1: Thompson Furniture is considering the purchase of equipment for $120,000. The equipment will expand the company's production and increase revenue by $30,000 per year. Annual cash operating expenses will increase by $7,000. The equipment's useful life is 10 years with no salvage value. Thompson uses straight-line depreciation. The income tax rate is 35%. What is the average rate of return on the investment?

Reference no: EM132524126

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