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A Company Projects an Increase in Net Income of $225,000

Question 186

Multiple Choice

A company projects an increase in net income of $225,000 each year for the next five years if it invests $900,000 in new equipment. The equipment has a five-year life and an estimated salvage value of $300,000. What is the annual rate of return on this investment?


A) 25.0%
B) 37.5%
C) 50.0%
D) 57.5%

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