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What is the average rate of return for pink petunias

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Pink Petunias, a wholesale nursery, is considering purchasing a new machine for their business for $300,000. The machine would allow Pink Petunias to increase their pre-tax cash flows by $90,000 each year. The company will depreciate the machine for 10 years using the straight-line method. Assume that after then 10 years the machine will be worth -0-. Pink Petunias' tax rate is 25%, and the required rate of return is 9%.

Problem 1: The average rate of return Is?

Reference no: EM132960362

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