The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year Operating Income   Net Cash Flow 1 $18,750       $93,750     2 18,750       93,750     3 18,750       93,750     4 18,750       93,750     5 18,750       93,750     The average rate of return for this investment is a.10% b.15% c.5% d.25%

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment:

Year Operating
Income
  Net Cash
Flow
1 $18,750       $93,750    
2 18,750       93,750    
3 18,750       93,750    
4 18,750       93,750    
5 18,750       93,750    

The average rate of return for this investment is

a.10%
b.15%
c.5%
d.25%
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