(Ignore income taxes in this problem.) The Halsey Corporation is contemplating the purchase of new equipment that would require an initial investment of $125,000. The equipment would have a useful life of six years, with a salvage value of $29,000. This new equipment would be depreciated over its useful life by the straight-line method. It would replace existing equipment which is fully depreciated. The existing equipment has a salvage value now of $38,000. The anticipated annual revenues and expenses associated with the new equipment are:

Assume cash flows occur uniformly throughout a year except for the initial investment and the salvage value at the end of the project.
-For this investment, the simple rate of return to the nearest tenth of a percent is:

Question

(Ignore income taxes in this problem.) The Halsey Corporation is contemplating the purchase of new equipment that would require an initial investment of $125,000. The equipment would have a useful life of six years, with a salvage value of $29,000. This new equipment would be depreciated over its useful life by the straight-line method. It would replace existing equipment which is fully depreciated. The existing equipment has a salvage value now of $38,000. The anticipated annual revenues and expenses associated with the new equipment are:

Assume cash flows occur uniformly throughout a year except for the initial investment and the salvage value at the end of the project.
-For this investment, the simple rate of return to the nearest tenth of a percent is:

Quizplus · Accepted Answer

The Answer of (Ignore income taxes in this problem.) The Halsey Corporation is contemplating the purchase of new equipment that would require an initial investment of $125,000. The equipment would have a useful life of six years, with a salvage value of $29,000. This new equipment would be depreciated over its useful life by the straight-line method. It would replace existing equipment which is fully depreciated. The existing equipment has a salvage value now of $38,000. The anticipated annual revenues and expenses associated with the new equipment are:

Assume cash flows occur uniformly throughout a year except for the initial investment and the salvage value at the end of the project.
-For this investment, the simple rate of return to the nearest tenth of a percent is:

(Ignore Income Taxes in This Problem