(Answered) Question - a company is considering purchasing factory

Accounting

Question - A company is considering purchasing factory equipment that costs $640,000 and is estimated to have no salvage value at the end of its 8-year useful life. If the equipment is purchased, annual revenues are expected to be $180,000 and annual operating expenses exclusive of depreciation expense are expected to be $76,000. The straight-line method of depreciation would be used.

If the equipment is purchased, the annual rate of return expected on this equipment is

A) 32.5%.

B) 3.8%.

C) 7.5%.

D) 16.3%.

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