The management of Hipster MicroBrew is considering the purchase of an automated bottling machine for $50,000. The machine would replace an old piece of equipment that costs $13,000 per year to operate. The new machine would cost $6,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $21,000. The new machine would have a useful life of 10 years with no salvage value.

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* note: What is the simple rate of return on the new bottling machine? (Round your answer to 1 decimal place i.e. 0.123 should be considered as 12.3%.)

1. 2. Depreciation expense Incremental net operating income Initial investment 3 4. Simple rate of return %