Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Performance Auditing A Measurement Approach

Authors: Ronell B. Raaum CGAP CGFM, Stephen L. Morgan CIA CGAP CFE CGFM

2nd Edition

0894136607, 9780894136603

More Books

Students also viewed these Accounting questions

Question

What is allocation? Discuss in detail.

Answered: 1 week ago