An Expansion at Fey, Incorporated, Would Increase Sales Revenues by $150,000

Multiple Choice

An expansion at Fey, Incorporated, would increase sales revenues by $150,000 per year and cash operating expenses by $47,000 per year. The initial investment would be for equipment that would cost $328,000 and have an 8 year life with no salvage value. The annual depreciation on the equipment would be $41,000. The simple rate of return on the investment is closest to (Ignore income taxes.) :

A) 41.3%
B) 18.9%
C) 12.5%
D) 31.4%