(Ignore income taxes in this problem.) Varnes Corporation is contemplating purchasing equipment that would increase sales revenues by $217,000 per year and cash operating expenses by $109,000 per year. The equipment would cost $324,000 and have a 6 year life with no salvage value. The annual depreciation would be $54,000.
Required:
Determine the simple rate of return on the investment to the nearest tenth of a percent. Show your work!

Question

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The Answer of (Ignore income taxes in this problem.) Varnes Corporation is contemplating purchasing equipment that would increase sales revenues by $217,000 per year and cash operating expenses by $109,000 per year. The equipment would cost $324,000 and have a 6 year life with no salvage value. The annual depreciation would be $54,000.
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