$$\text { Reference: 10-01 }$$ Shields Company Has Gathered the Following Data on a Proposed

$$\text { Reference: 10-01 }$$ Shields Company has gathered the following data on a proposed investment project: $$\begin{array} { | l | l | } \hline \text { Investment required in equipment } & \$ 400,000 \\\hline \text { Annual cash inflows } & \$ 80,000 \\\hline \text { Salvage value } & \$ \quad 0 \\\hline \text { Life of the investment } & 10 \text { years } \\\hline \text { Discount rate } & 10 \% \\\hline\end{array}$$
-The simple rate of return on the investment is closest to:

A) 20%.
B) 15%.
C) 5%.
D) 10%.

Correct Answer:

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