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A company is considering purchasing equipment that would increase sales revenues by $300,000 per year and increase cash operating expenses by $110,000 per year. The
A company is considering purchasing equipment that would increase sales revenues by $300,000 per year and increase cash operating expenses by $110,000 per year.
The equipment would cost $250,000 and have a 5-year useful life with no salvage value.
Question: Ignoring income taxes, what is the simple rate of return on the investment in percentage terms? Give the percentage solution AND show your work in calculating your answer. If you only provide the percentage answer, you will receive zero credit.
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