Calculating Estimated Return on Investment for New High-tech Machinery
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Question
A corporation adds to its fixed assets by investing $60 million in new high tech machinery. It expects to increase its annual net profits by $11 million in each of the next 15 years (by then the machinery will be obsolete and will be scrapped at zero cost). What is the estimated annual rate of return on this investment in new technology?
Summary
The question belongs to Finance and it is about a company investing in a new machinery which will be used for 15 years and will scrapped at zero cost after that period. Now, an estimated rate of return on this investment needs to be calculated.
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