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Memphis Co. is going to purchase a machine for $83,200 that will increase cash flows by $40,000 in the first year, $30,000 the second year, and $25,000 the third year. The machine will have no residual value. The minimum rate of return is 10 percent. The present value factors for the three years are 0.909, 0.826, and 0.751, respectively.

a) The machine's actual rate of return is

b) Unable to determine from the data given

c) greater than 10 percent.

d) less than 10 percent.

e) 10 percent.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M995906

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