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Calculate the simple rate of return for the investment

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Question - Joetz Corporation has gathered the following data on a proposed investment project (Ignore income taxes.):

Investment required in equipment $30,000

Annual cash inflows $6,000

Salvage value of equipment $0

Life of the investment 15years

Required rate of return 10%

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 for the investment (rounded to the nearest tenth of a percent) is:

  • 20.0%
  • 13.3%
  • 18.0%
  • 10.0%

Reference no: EM131730195

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