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A company is considering purchasing factory equipment that costs $400000 and is estimated to have no salvage value at the end of its 5-year useful

A company is considering purchasing factory equipment that costs $400000 and is estimated to have no salvage value at the end of its 5-year useful life. If the equipment is purchased, annual revenues are expected to be $162000 and annual operating expenses exclusive of depreciation expense are expected to be $27000. The straight-line method of depreciation would be used. If the equipment is purchased, the annual rate of return expected on this equipment is

O 6.75% O 27.50%. O 33.75% O 40.50%.

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