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Option 1 : Purchase a new machine for the Production Department for $ 5 5 0 , 0 0 0 . The machine will increase

Option 1: Purchase a new machine for the Production Department for $550,000. The machine will increase productivity by
6% and all of the additional units manufactured can be sold. The cost of the machine is $550,000 and it has a 10-year life.
The net cash inflow is expected to be $127,000 each year for 10 years.
Option 2: Invest in a new fleet of automobiles for Sales and Services Department. The automobiles consist of a mix of cars
for salespeople, delivery trucks to ship completed products, and specialty cargo trucks for transporting raw materials used
in production. The selected vehicles are more fuel efficient, equipped with the latest technology to help avoid accidents,
and provide greater capacity for the needs of the company. The fleet of vehicles could be purchased for $800,000 and are
expected to have a 10-year useful life. ABC expects a net cash inflow of $184,000 each year for 10 years.
Option 3: Purchase a new company-wide ERP system, which can link the relevant functions. This will improve
communications among all departments, reduce redundant information, and minimize errors. The ERP system has a cost of
$536,000, which includes training, setup, and periodic upgrades to avoid obsolescence for 6 years. It has an estimated
useful life of 9 years and expected net cash inflow of $40,736.
can you help me find the unadjusted rate of return for all these examples and explain how you did it.

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