You are thinking of starting an energy drink business that requires an initial investment of $16 000 and a major replacement of equipment after 10 years, amounting to $8000. From competitive experience, you expect to have a net loss of $2000 the first year, a net profit of $2000 the second year, and, for the remaining years of the first 15 years of operations, net returns of $6000 per year. After 15 years, the net returns will gradually decline and will be zero at the end of 25 years (assume returns of $3000 per year for that period). After 25 years, your lease will expire. The salvage value of equipment at that time is expected to be just sufficient to cover the cost of closing the business.
Find the rate of return for situations below (correct to the nearest 10th of a percent).