A company is considering purchasing factory equipment that costs $480,000 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 $135,000 and annual operating expenses exclusive of depreciation expense are expected to be $39,000. The straight-line method of depreciation would be used. If the equipment is purchased, the annual rate of return expected on this equipment is

20.0%.

40.0%.

7.5%.

15.0%.