Purvell Corporation has just acquired a new machine with the following characteristics (Ignore income taxes.): Cost of the equipment$50,000 Annual cash savings$15,000 Life of the machine 8yearsThe company uses straight-line depreciation and a $5,000 salvage value. Assume cash flows occur uniformly throughout a year except for the initial investment and the salvage at the end of the project.The simple rate of return would be closest to:
A. 17.5%
B. 18.75%
C. 12.5%
D. 30.0%
Answer: B
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