Cardinal Company is considering a project that would require a $$2,800,000$ investment in equipment with a useful life of five years. At the end of five years, the project would terminate and the equipment would be sold for its salvage value of $$300,000.$ The company's discount rate is $14\%.$ The project would provide net operating income each year as follows:

$$2,845,000$

$1,19,000$

eBook

Print

References

Variable expenses

Contribution margin

Fixed expenses:

Advertising, salaries, and other fixed out$-$of$-$pocket costs

Depreciation

Total fixed expenses

Net operating income

$ $799,000$

$500,000$

$1,299,000$

$ $437,000$

Required:

If the equipment's salvage value was $$500,000$ instead of $$300,000,$ what would be the project's simple rate of return? $($Round your answer to $2$ decimal places.$)$

Simple rate of return