Question
Joetz Corporation has gathered the following data on a proposed investment project (Ignore income taxes.): Investment required in equipment $ 31,000 Annual cash inflows $
Joetz Corporation has gathered the following data on a proposed investment project (Ignore income taxes.):
| Investment required in equipment | $ 31,000 | |
|---|---|---|
| Annual cash inflows | $ 6,400 | |
| 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:
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