The management of River Corporation is considering the purchase of a new machine costing $380,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for five years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment:

-The average rate of return for this investment is

Question

The management of River Corporation is considering the purchase of a new machine costing $380,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for five years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment:
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-The average rate of return for this investment is

Quizplus · Accepted Answer

The average rate of return is calculated based on the formula for average return, which typically involves summing up the yearly returns and dividing by the number of years. Without specific numbers provided for the investment's performance over time, the correct answer cannot be determined from calculation alone. However, given the options, 10.5% is chosen as the correct answer based on the assumption that this question is related to a specific context or example where 10.5% is the calculated average rate of return.

The Management of River Corporation Is Considering the Purchase of a New