A company is considering purchasing factory equipment that costs $500000 and is estimated to have no salvage value at the end of 5-year useful life. If the equipment is purchased, annual revenues are expected to be $159000 and annual operating expenses exclusive of depreciation expense are expected to be $22000. The straight-line method of depreciation would be used. If the equipment is purchased, the annual rate of return expected on this equipment is:
- 5.48%.
- 31.80%.
- 14.80%
- 27.40%

Question

13-08-2024
Business

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A company is considering purchasing factory equipment that costs $500000 and is estimated to have no salvage value at the end of 5-year useful life. If the equipment is purchased, annual revenues are expected to be $159000 and annual operating expenses exclusive of depreciation expense are expected to be $22000. The straight-line method of depreciation would be used. If the equipment is purchased, the annual rate of return expected on this equipment is:
- 5.48%.
- 31.80%.
- 14.80%
- 27.40%

Sagot :

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