Considering purchasing factory equipment


A company is considering purchasing factory equipment that costs $480,000 and is estimated to have no salvage value at the end of its 8-year useful life. If the equipment is purchased, annual revenues are expected to be $135,000 and annual operating expenses exclusive of depreciation expense are expected to be $39,000. The straight-line method of depreciation would be used.If the equipment is purchased, the annual rate of return expected on this equipment?

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Accounting Basics: Considering purchasing factory equipment
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