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What chloe true rate of return on the investment is

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Problem 1: CHLOE COMPANY is planning to invest P40,000 in a machine with a useful life of 5 years and no salvage value. The straight-line method of depreciation will be used. CHLOE estimates that the annual cash inflow from operations, net of income taxes from using this machine will be P 10,000. CHLOE's desired rate of return on investments of this type is 10% . The present value of an ordinary annuity of P I for five periods at 10% is 3.791. The present value of PI for five periods at 10% is 0.621. Using the net-present value method. CHLOE's true rate of return on this investment is

a. 0%

b. 10%

c. less than l0%but more than 0%

d. More than 10%

 

Reference no: EM132659452

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