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The management of River Corporation is considering the purchase of a new machine costing $380,000. The company's desired rate of return is 6%. The present

The management of River Corporation is considering the purchase of a new machine costing $380,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment Year Operating Income Net Cash Flow 1 $20,000 $95,000 2 20,000 95,000 . 20,000 95,000 4 20,000 95,000 20,000 95,000 The average rate of retum for this investment is 8.90 Ob 15% Oc 25% Od. 195%

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