(Ignore income taxes in this problem. )The management of Orebaugh Corporation is investigating automating a process by replacing old equipment by a new machine.The old equipment would be sold for scrap now for $15,000.The new machine would cost $445,000,would have a 5 year useful life,and would have no salvage value.By automating the process,the company would save $165,000 per year in cash operating costs.
Required:
Determine the simple rate of return on the investment to the nearest tenth of a percent.Show your work!

Question

Quizplus · Accepted Answer

The Answer of (Ignore income taxes in this problem. )The management of Orebaugh Corporation is investigating automating a process by replacing old equipment by a new machine.The old equipment would be sold for scrap now for $15,000.The new machine would cost $445,000,would have a 5 year useful life,and would have no salvage value.By automating the process,the company would save $165,000 per year in cash operating costs.
Required:
Determine the simple rate of return on the investment to the nearest tenth of a percent.Show your work!

(Ignore Income Taxes in This Problem