Exercise 12-6 Simple Rate of Return Method [LO12-6] 25 Dos The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $62000 The machine would replace an old piece of equipment that costs $16.000 per year to operate. The new machine would cost $7000 per year to operate. The old machine currently in use could be sold now for a salvage value of $23.000. The new machine would have a useful life of 10 years with no salvage value Required: 1. What is the annual depreciation expense associated with the new botting machine? 2. What is the annual incremental net operating income provided by the new bottling machine? 3 What is the amount of the initial investment associated with this project that should be used for calculating the simple rate of retum 4. What is the simple rate of return on the new bottling machine (Round your answer to 1 decimal place l... 0123 should be considered as 12.3%) Answer is complete but not entirely correct. 5 1 2 Depreciation expense incremental na peting income initial investment Simple rate of room 5 3 6200 3.COM 39000 720 1