Consider the following Investment Opportunity:
Initial cost at time 0.......$15 Million
Annual revenues beginning at time 1.....$25 million
Annual operating costs exclusive of depreciation .....$13 million
Expected life of investment.....6 years
Salvage value after taxes.....$0 dollars
Annual depreciation for tax purposes.....$3 million
Tax Rate..........40%
What is the rate of return on this investment?
a) 23.44%
b) 19.14%
c) 28.72%
d) 51.34%