A Company Is Considering Purchasing Factory Equipment Which Costs $480000

Multiple Choice

A company is considering purchasing factory equipment which costs $480000 and is estimated to have no salvage value at the end of its 8-year useful life. If the equipment is purchased annual revenues are expected to be $225000 and annual operating expenses exclusive of depreciation expense are expected to be $95000. The straight-line method of depreciation would be used. If the equipment is purchased the annual rate of return expected on this project is

A) 54.2%.
B) 14.6%.
C) 29.2%.
D) 27.1%.