A Company Is Considering Purchasing a Machine That Costs $280,000

A company is considering purchasing a machine that costs $280,000 and is estimated to have no salvage value at the end of its 8-year useful life. If the machine is purchased, annual revenues are expected to be $100,000 and annual operating expenses exclusive of depreciation expense are expected to be $38,000. The straight-line method of depreciation would be used. If the machine is purchased, the annual rate of return expected on this machine is

A) 22.1%.
B) 44.3%.
C) 9.6%.
D) 19.3%.

Correct Answer:

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