value 6.00 points Hinck C would have a 10 year useful life and no salvage value.

Question

value 6.00 points Hinck C would have a 10 year useful life and no salvage value. By automating the process, the company would save $155,000 per year in cash operating costs. The company's current equipment would be sold for scrap orporation is investigating automating a process by purchasing a new machine for $523,000 that yielding $30,000. The annual depreciation on the new machine would be $52,300 fignore income taxes.) Required: Determine the simple rate of return on the investment to the nearest tenth of a percent. (Round your answer to 1 decimal place.) Simple rate of return

Explanation / Answer

here cost saving = $ 155,000

depreciation = $ 52,300

initial investment = machine cost of new machine - solvage vaue of old machine

= $ 523,000 -30000

= $ 493,000

SIMPLE RATE OF RETURN = ( COSTING SAVING - DEPRECIATION) / INITIAL INVESTMENT

= ($ 155,000 - $ 52300 ) / $ 493,000

= 21 %

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