Pilot Corporation Is Considering the Purchase of Equipment Costing $100,000

Multiple Choice

Pilot Corporation is considering the purchase of equipment costing $100,000.The equipment will reduce operating cash expenses by $25,000 each year.The new equipment has a salvage value of $2,000 and will be depreciated over a 10-year useful life.The accounting rate of return is closest to

A) 15.2%.
B) 25%.
C) 25.5%.
D) 35%.