Multiple Choice Question 115 Metlock Company is considering two capital investme

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Multiple Choice Question 115 Metlock Company is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Initial investment Annual net income Net annual cash inflovw Estimated useful life Salvage value Project Nuts S600000 42000 128000 6 years 26000 104000 5 years The company requires a 10% rate of return on all new investments. Present Value of an Annuity of 1 9% 10% 11% 12% 3.890 3.791 3.696 3.605 4.486 4.355 4.231 4.111 Periods 926 The annual rate of return for Project Soup is 6.5%. 52.0%. 13.0%. Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

D. 13.0%

Annual Rate of Return = (Average Net Income / Average Investment) * 100 = $26,000 / ($400,000/ 2 ) * 100 = 13.0%

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