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(Ignore Income taxes on this problem). The IBM company has invested in a machine that cost 72,000, that has a useful life of 8 years,

(Ignore Income taxes on this problem). The IBM company has invested in a machine that cost 72,000, that has a useful life of 8 years, and that has no salvage value at the end of its useful life. The machine is being depreciated by the straight-line method, based on its useful life. It will have a payback period of four years. Given this data, the simple rate of return on the machine is closest to:

1. 10.0%

2. 8.9%

3. 12.5%

4. 37.5%

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