Ava Company projects an increase in net income of $34,766 each year for the next five years if it invests $140,145 in new equipment. The equipment has a five-year life and an estimated salvage value of $5,273. What is the annual rate of return on this investment? Round your answer to 2 decimal places. Answer as a percentage. For example, if your calculation is .1056, your answer would be 10.56

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.