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A company is considering the purchase of equipment that costs $120,000 and has an estimated residual value of $10,000 after its 5 year useful life.

A company is considering the purchase of equipment that costs $120,000 and has an estimated residual value of $10,000 after its 5 year useful life. It is expected to generate total net income of $95,000 over its useful life. What is the average rate of return of this investment?

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