Question 6

Z Corporation is investigating purchasing equipment that would increase sales revenues by $83324 per year and cash operating expenses by $30410 per year. The equipment would cost $115086 and have a 5 year life with no salvage value. Compute the simple rate of return on the investment. Round your answer to 2 decimal places THEN enter as a percent without the sign i.e. 0.454 would be 45.

Hint: simple rate of return is based on Net Income NOT cash flows so you will need to first compute Net Income which deducts ALL expenses not just cash.