What the simple rate of return for the investment is

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

Investment required in equipment $38,500

Annual cash inflows $9,400

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.

Problem 1: The simple rate of return for the investment (rounded to the nearest tenth of a percent) is

Reference no: EM132977158

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