Lakeland Company is considering the purchase of equipment for $166,000. The equipment will expand the Company's...

Transcribed Image Text:

Lakeland Company is considering the purchase of equipment for $166,000. The equipment will expand the Company's production and increase revenue by $52,000 per year. Annual cash operating expenses will increase by $10,000. The equipment's useful life is 10 years with no salvage value. Lakeland uses straight-line depreciation. The income tax rate is 35%. What is the average rate of return on the investment? Do not use negative signs with your answers. Increase in revenue Increase in expenses Pretax income from investment Income tax expense Net income from investment $ $ Round answer to the nearest whole percentage, if applicable. Average rate of return on investment % Lakeland Company is considering the purchase of equipment for $166,000. The equipment will expand the Company's production and increase revenue by $52,000 per year. Annual cash operating expenses will increase by $10,000. The equipment's useful life is 10 years with no salvage value. Lakeland uses straight-line depreciation. The income tax rate is 35%. What is the average rate of return on the investment? Do not use negative signs with your answers. Increase in revenue Increase in expenses Pretax income from investment Income tax expense Net income from investment $ $ Round answer to the nearest whole percentage, if applicable. Average rate of return on investment %

Answer rating: 100% (QA)

To calculate the average rate of return on the investment we need to determine the net income from t... View the full answer