Question
Bowman Corporation is considering an investment in special-purpose equipment to enable the company to obtain a four-year contract for the manufacturer of a special item.
Bowman Corporation is considering an investment in special-purpose equipment to enable the company to obtain a four-year contract for the manufacturer of a special item. The equipment cost $164,000 and would have no salvage value when the contract expires at the end of four years. Listed are the estimated annual operating results of the project:
Revenue from contract sales is $300,000, expenses other than depreciation is $218,000, depreciation (straight-line basis) is $41,000; ($218,000 + $41,000 = $259,000). The increase in net income from contract work is $41,000.
WHAT IS THE ROI?
NEED ASAP. THANKS
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