Hanley Company Has Purchased a Machine for $125,000 That Will

Hanley Company has purchased a machine for $125,000 that will be depreciated on the straight-line basis over a five-year period with no salvage value. The related cash flow from operations is expected to be $45,000 a year. These cash flows from operations occur uniformly throughout the year. (Ignore income taxes in this problem.)
-What is the simple rate of return on the initial investment?

A) 16%.
B) 24%.
C) 28%.
D) 36%.

Correct Answer:

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