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Crowl Corporation is investigating automating a process by purchasing a machine for $792,900 that would have a 9 year useful life and no salvage value.
Crowl Corporation is investigating automating a process by purchasing a machine for $792,900 that would have a 9 year useful life and no salvage value. By automating the process, the company would save $132,500 per year in cash operating costs. The new machine would replace some old equipment that would be sold for scrap now, yielding $21,100. The annual depreciation on the new machine would be $88,100.
The simple rate of return on the investment is closest to (ignore income taxes)
A. 11.11%
B. 16.71%
C. 5.11%
D. 5.75%
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