The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $43,000. The machine would replace an old piece of equipment that costs $11,000 per year to operate. The new machine would cost $5,000 per year to operate. The old machine currently in use could be sold now for a scrap value of $18,000. The new machine would have a useful life of 10 years with no salvage value.

Required:

Compute the simple rate of return on the new automated bottling machine.

Simple Rate of Return

Choose Numerator:	/	Choose Denominator:	=	Simple Rate of Return
annual incremental net operating income or Initial Investment		annual incremental net operating income or Initial Investment