The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year Operating Income   Net Cash Flow 1 $18,750       $93,750     2 18,750       93,750     3 18,750       93,750     4 18,750       93,750     5 18,750       93,750     The average rate of return for this investment is a.10% b.15% c.5% d.25%

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A:

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