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Question
Atlantic Company is considering investing in specialized equipment costing $360,000. The equipment has a useful life of 5 years and a residual value of $45,000. Depreciation is calculated using the straight-line method. The expected net cash inflows from the investment are:
| Year 1 | $160,000 |
| Year 2 | 130,000 |
| Year 3 | 100,000 |
| Year 4 | 55,000 |
| Year 5 | 40,000 |
| $485,000 |
What is the rate of return on the investment?
A) 16.8%
B) 23.9%
C) 18.9%
D) 12.4%
Answer
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