29. X Corporation is considering buying a $25,000 machine. Its estimated useful life is 5 years, with no salvage value. X anticipates annual net income after taxes of $1,500 from the new machine. What is the rate of return on average investment, assuming that X uses straight-line depreciation and that the net income is earned uniformly throughout each year? O A. 6.0% B. 8.0% C. 12.0% D. 26.0% E. 52.0%

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Chapter10: Project Cash Flows And Risk
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29. X Corporation is considering buying a $25,000 machine. Its estimated useful life
is 5 years, with no
salvage value. X anticipates annual net income after taxes of $1,500 from the new
machine. What is the
rate of return on average investment, assuming that X uses straight-line depreciation
and that the net
income is earned uniformly throughout each year?
A. 6.0%
B. 8.0%
C. 12.0%
D. 26.0%
E. 52.0%
Transcribed Image Text:29. X Corporation is considering buying a $25,000 machine. Its estimated useful life is 5 years, with no salvage value. X anticipates annual net income after taxes of $1,500 from the new machine. What is the rate of return on average investment, assuming that X uses straight-line depreciation and that the net income is earned uniformly throughout each year? A. 6.0% B. 8.0% C. 12.0% D. 26.0% E. 52.0%
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