Question
TB MC Qu. 08-92 (Ignore income taxes in this problem.) Mercer Corporation... (Ignore income taxes in this problem.) Mercer Corporation is considering replacing a technologically
TB MC Qu. 08-92 (Ignore income taxes in this problem.) Mercer Corporation...
(Ignore income taxes in this problem.) Mercer Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $180,000 and would have a twelve-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $26,000 per year to operate and maintain, but would save $58,000 per year in labor and other costs. The old machine can be sold now for scrap for $18,000. The simple rate of return on the new machine is closest to:(Assume the company uses straight-line depreciation.)
10.49%
20.99%
32.22%
9.44%
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