Problem:
Mecha Oil Company is considering investing in a new oil well. It is expected that the oil well will increase annual revenues by $142,300 and will increase annual expenses by $72,988 including depreciation. The oil well will cost $492,800 and will have a $236,800 salvage value at the end of its 6-year useful life.
Required:
Question: Calculate the annual rate of return.
Note: Provide support for your rationale.