Question
The management of Wallingford MicroBrew is considering the purchase of an automated bottling machine for $88,200. The machine would replace an old piece of equipment
The management of Wallingford MicroBrew is considering the purchase of an automated bottling machine for $88,200. The machine would replace an old piece of equipment that costs $42,000 per year to operate. The new machine would cost $13,000 per year to operate. The old machine currently in use could be sold now for a scrap value of $11,000. The new machine would have a useful life of 9 years with no salvage value.
Required:
Compute the simple rate of return on the new automated bottling machine. Use straight-line depreciation method.(Round your percentage answer to one decimal place.)
Simple Rate of Return: __%
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