A company is considering purchasing factory equipment that costs $400000 and is estimated to have no salvage value at the end of its 5-year useful life. If the equipment is purchased, annual revenues are expected to be $157000 and annual operating expenses exclusive of depreciation expense are expected to be $23000. The straight-line method of depreciation would be used. If the equipment is purchased, the annual rate of return expected on this equipment is 0 27.00% . 0 33.50%. O 39.25%. 6.70%. which is correct ans

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A company is considering purchasing factory equipment that costs $400000 and is estimated to have no salvage value at the end of its 5 - year useful life. If the equipment is
purchased, annual revenues are expected to be $157000 and annual operating expenses exclusive of depreciation expense are expected to be $23000. The straight-line method
of depreciation would be used. If the equipment is purchased, the annual rate of return expected on this equipment is 0 27.00 % . 0 33.50% . 0 39.25 %. 6.70%. which is correct
ans
Transcribed Image Text:A company is considering purchasing factory equipment that costs $400000 and is estimated to have no salvage value at the end of its 5 - year useful life. If the equipment is purchased, annual revenues are expected to be $157000 and annual operating expenses exclusive of depreciation expense are expected to be $23000. The straight-line method of depreciation would be used. If the equipment is purchased, the annual rate of return expected on this equipment is 0 27.00 % . 0 33.50% . 0 39.25 %. 6.70%. which is correct ans
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