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Overland Corporation has gathered the following data on a proposed investment project: Investment required in equipment $ 630,000 Annual cash inflows $ 64,000 Salvage value
Overland Corporation has gathered the following data on a proposed investment project:
Investment required in equipment | $ | 630,000 | |
Annual cash inflows | $ | 64,000 | |
Salvage value of equipment | $ | 0 | |
Life of the investment | 15 | years | |
Required rate of return | 6 | % | |
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 on the investment is: (Round your answer to the nearest interest rate.)
a. 3%
b. 4%
c. 8%
d. 5%
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