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Lakeland Company is considering the purchase of equipment for $175,000. The equipment will expand the Company's production and increase revenue by $40,000 per year. Annual
Lakeland Company is considering the purchase of equipment for $175,000. The equipment will expand the Company's production and increase revenue by $40,000 per year. Annual cash operating expenses will increase by $12,000. The equipment's useful life is 10 years with no salvage value. Lakeland uses straight-line depreciation. The income tax rate is 25%. What is the average rate of return on the investment?
Do not use negative signs.
1.
Increase in revenue | Answer |
Increase in expenses | Answer |
Pretax income from investment | Answer |
Income tax expense | Answer |
Net income from investment | Answer |
2. Round answer to the nearest whole percentage, if applicable.
Average rate of return on investment
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