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Please answer and explain ASAP I am taking the test now: Ignore income taxes in this problem.) Mercer Corporation is considering replacing a technologicaly obsolete
Please answer and explain ASAP I am taking the test now:
Ignore income taxes in this problem.) Mercer Corporation is considering replacing a technologicaly obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $100,000 and would have a sixteen- year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $10,000 per year to operate and maintain, but would save $40,000 per year in labor and other costs. The old machine can be sold now for scrap for $10,000. The simple rate of return on the new machine is closest to: (Assume the company uses straight-line depreciation.) 52.78% 40,00% 26,39% 23.75%Step by Step Solution
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