Atlantic Company Is Considering Investing in Specialized Equipment Costing $360,000

Multiple Choice

Atlantic Company is considering investing in specialized equipment costing $360,000. The equipment has a useful life of 5 years and a residual value of $45,000. Depreciation is calculated using the straight-line method. The expected net cash inflows from the investment are:
$$\begin{array} { | l | r | } \hline \text { Year 1 } & \$ 160,000 \\\hline \text { Year 2 } & 130,000 \\\hline \text { Year 3 } & 100,000 \\\hline \text { Year 4 } & 55,000 \\\hline \text { Year 5 } & 40,000 \\\hline & \$ 485,000 \\\hline\end{array}$$
What is the rate of return on the investment?

A) 16.8%
B) 23.9%
C) 18.9%
D) 12.4%