Question
Mercer Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $210,000 and would have
Mercer Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $210,000 and would have a ten-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $32,000 per year to operate and maintain, but would save $65,000 per year in labor and other costs. The old machine can be sold now for scrap for $21,000. The simple rate of return on the new machine is closest to: (Ignore income taxes in this problem.) A 12.70% B 6.35% C 5.71% D 30.95%
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