(Ignore Income Taxes in This Problem

Multiple Choice

(Ignore income taxes in this problem.) The management of Duker Corporation is investigating purchasing equipment that would increase sales revenues by $130,000 per year and cash operating expenses by $39,000 per year. The equipment would cost $328,000 and have an 8 year life with no salvage value. The simple rate of return on the investment is closest to:

A) 12.5%
B) 27.7%
C) 38.5%
D) 15.2%