Question
1. Tu Corporation is investigating automating a process by purchasing a machine for $423,000 that would have a 9 year useful life and no salvage
1. Tu Corporation is investigating automating a process by purchasing a machine for $423,000 that would have a 9 year useful life and no salvage value. By automating the process, the company would save $112,000 per year in cash operating costs. The new machine would replace some old equipment that would be sold for scrap now, yielding $27,000. The annual depreciation on the new machine would be $47,000. The simple rate of return on the investment is closest to:
A. 15.4% B. 16.4% C. 26.5% D. 11.1%
2. The net present value on this investment is closes to:
A. $400,000
B. $80,000
C. $91,600
D. $76,750
3. The internal rate of return on the investment is closest to:
A. 11%
B. 13%
C. 15%
D. 17%
Please show work for all the answers, the calculations are the most important.
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