A company is considering purchasing factory equipment that costs $400,000 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 $149,000 and annual operating expenses exclusive of depreciation expense are expected to be $23,000. The straight-line method of depreciation would be used. If the equipment is purchased, the annual rate of return expected on this equipment is 6.30%. 37.25%. 31.50%. 23.0%