(Ignore income taxes in this problem.) The management of Gertz Corporation is investigating purchasing equipment that would cost $276,000 and have a 6 year life with no salvage value. The equipment would allow an expansion of capacity that would increase sales revenues by $107,000 per year and cash operating expenses by $40,000 per year.
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.) The management of Gertz Corporation is investigating purchasing equipment that would cost $276,000 and have a 6 year life with no salvage value. The equipment would allow an expansion of capacity that would increase sales revenues by $107,000 per year and cash operating expenses by $40,000 per year.
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