Solution: What is the approximate rate of return (ROR) on the investment?

A small machine has an initial cost of P20,000, a salvage value of P2,000 and a life of 10 years. If your cost of operation per year is P3,500 and your revenues per year is P9,000, what is the approximate rate of return (ROR) on the investment?

Problem Statement: EE Board April 1997

A small machine has an initial cost of P20,000, a salvage value of P2,000 and a life of 10 years. If your cost of operation per year is P3,500 and your revenues per year is P9,000, what is the approximate rate of return (ROR) on the investment?

• A. 24.2%
• B. 24.8%
• C. 25.1%
• D. 25.4%

The approximate rate of return (ROR) on the investment is 24.8%.

Solution:

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