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J Corporation has gathered the following data on a proposed investment project (Ignore income taxes.): Investment required in equipment $ 39,000 Annual cash inflows $
J Corporation has gathered the following data on a proposed investment project (Ignore income taxes.):
Investment required in equipment | $ | 39,000 | |
Annual cash inflows | $ | 9,600 | |
Salvage value of equipment | $ | 0 | |
Life of the investment | 15 | years | |
Required rate of return | 10 | % | |
The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment.
The simple rate of return for the investment (rounded to the nearest tenth of a percent) is:
Multiple Choice
31.2%
17.9%
12.6%
26.1%
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