Solution with details and comment

Owners of a plant that manufactures edible oil are considering constructing a tank to store unrefined oil; this will permit buying raw oil at more favorable prices. The cost of the tank is $150,000, it has an expected life of 10 years and a salvage value at the end of its life of $20,000. The anticipated annual saving in oil cost is $25,000. What is the rate of return on the investment