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Joetz Corporation has gathered the following data on a proposed investment project (Ignore income taxes.): Investment required in equipment $38,500 Annual cash inflows $9,400 Salvage
Joetz Corporation has gathered the following data on a proposed investment project (Ignore income taxes.):
Investment required in equipment $38,500
Annual cash inflows $9,400
Salvage value of equipment $0
Life of the investment 15years
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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