Magix Productions orders new equipment for the company.The new equipment costs $50,000 and will help the company to save $10,000 annually.What is the average rate of return of the equipment?
A) 15 percent
B) 20 percent
C) 35 percent
D) 40 percent

Question

Quizplus · Accepted Answer

The average rate of return (ARR) is a percentage that represents the organization's average annual earnings for each dollar of a given investment. In this scenario, the ARR of the equipment would be the $10,000 annual savings divided by the $50,000 cost, or 0.2-a 20 percent return.

Magix Productions Orders New Equipment for the Company