Ducey Corporation is contemplating purchasing equipment that would increase sales revenues by $79,000 per year and cash operating expenses by $27,000 per year. The equipment would cost $150,000 and have a 6 year life with no salvage value. The annual depreciation would be $25,000. (Ignore income taxes.)Required:Determine the simple rate of return on the investment to the nearest tenth of a percent.

Question

Quizplus · Accepted Answer

The Answer of Ducey Corporation is contemplating purchasing equipment that would increase sales revenues by $79,000 per year and cash operating expenses by $27,000 per year. The equipment would cost $150,000 and have a 6 year life with no salvage value. The annual depreciation would be $25,000. (Ignore income taxes.)Required:Determine the simple rate of return on the investment to the nearest tenth of a percent.

Ducey Corporation Is Contemplating Purchasing Equipment That Would Increase Sales