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J Corporation has gathered the following data on a proposed investment project (Ignore income taxes.):...

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Accounting

J Corporation has gathered the following data on a proposed investment project (Ignore income taxes.):

Investment required in equipment $ 39,000
Annual cash inflows $ 9,600
Salvage value of equipment $ 0
Life of the investment 15 years
Required rate of return 10 %

The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment.

The simple rate of return for the investment (rounded to the nearest tenth of a percent) is:

Multiple Choice

31.2%

17.9%

12.6%

26.1%

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