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Default the average rate of return for this investment is

The management of Hence Corporation is considering the purchase of a new machine costing $200,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability in this situation:

Income from...................Net Cash
Year......................................Operations........................Flow
1..............................................$50,000.......................$90,000
2................................................30,000.........................60,000
3................................................10,000..........................50,000
4.................................................5,000...........................45,000
5.................................................5,000............................45,000

The average rate of return for this investment is :
a. 18%.
b. 16%.
c. 58%.
d. 20%

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