ignore income taxes in his problem. Hinck Corporation is investigat ng au o mati

Question

ignore income taxes in his problem. Hinck Corporation is investigat ng au o mating a process by puro as ng a ew machne fo ese p that would have a 6 yea us fu·e andro salvage value. By automating the process, the company would save $135,000 per year in cash operating costs. The company's current equipment would be sold for scrap now, yielding $26,000. The annual depreciation on the new machine would be $86,500 Required: Determine the simple rate of return on the investment to the nearest tenth of a percent. (Round final answer to one decimal place.) turn

Explanation / Answer

Annual net income = 135000-86500= $48500 Investment = 519000-26000= $493000 Simple rate of return = 48500/493000 = 9.8%

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