t34

The management of Ro Corporation is investigating automating a process. Old equipment, with a current salvage value of $12,000, would be replaced by a new machine. The new machine would be purchased for $360,000 and would have a 6 year useful life and no salvage value. By automating the process, the company would save $125,000 per year in cash operating costs. The simple rate of return on the investment is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.)

Multiple Choice

• 18.7%

• 18.1%

• 34.7%

• 16.7%