(Ignore income taxes in this problem.) Shields Company has gathered the following dataon a proposed investment project:Investment required in equipment ......$400,000$80,000Annual cash inflows.Salvage value$0Life of the investment.10 years10%Discount rate.The simple rate of return on the investment is closest to:Select one:5%b. 10%15%d. 20%

Investment in equipment is considered an investment in fixed assets, which is likely to provide…

Answered: Investment required in equipment.…

Investment required in equipment. Annual cash inflows... Salvage value Life of the investment. Discount rate...... $400,000 $80,000 $0 10 years 10%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

(Ignore income taxes in this problem.) Shields Company has gathered the following data
on a proposed investment project:
Investment required in equipment ......
$400,000
$80,000
Annual cash inflows.
Salvage value
$0
Life of the investment.
10 years
10%
Discount rate.
The simple rate of return on the investment is closest to:
Select one:
5%
b. 10%
15%
d. 20%

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