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McDougal Products is considering the purchase of new equipment to place in its factory. The equipment would cost $365,000, have a ten-year useful life and
McDougal Products is considering the purchase of new equipment to place in its factory. The equipment would cost $365,000, have a ten-year useful life and a salvage value at the end of its useful life of $65,000. The company estimates that annual revenues and expenses associated with the would be as follows: 210,000 $ Revenues Less operating expenses: Salaries Depreciation Maintenance Net operating income 100,000 30,000 20,000 $ 150,000 60,000 The simple rate of return on the new equipment is closest to: a. 20.0% b. 16.4% O c. 30.0% O d. 24.7%
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