Assume that a company is considering a $2,500,000 capital investment in a project that would earn net income for each of the next five years as follows:

Sales		$ 1,900,000
Variable expenses		800,000
Contribution margin		1,100,000
Fixed expenses:
Out-of-pocket operating costs	$ 300,000
Depreciation	400,000	700,000
Net operating income		$ 400,000

The projects simple rate of return is closest to:

Group of answer choices

24%.

18%.

32%.

16%.