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A cannery is considering installing an automatic case-sealing machine to replace current hand methods. If they purchase the machine for $5000 in June, at the beginning of the canning season, they will save $500 per month for the 4. months each year that the plant is in operation. Maintenance costs the case-sealing machine are expected to be negligible. The case-sealing machine is expected to be useful for five annual canning seasons and then will have no salvage value. What is the nominal annua rate of return as a percentage?

A cannery is considering installing an automatic case-sealing machine to replace current hand methods. If they purchase the machine for $5000 in June, at the beginning of the canning season, they will save $500 per month for the 4. months each year that the plant is in operation. Maintenance costs the case-sealing machine are expected to be negligible. The case-sealing machine is expected to be useful for five annual canning seasons and then will have no salvage value. What is the nominal annua rate of return as a percentage?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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A cannery is considering installing an automatic case-sealing machine to replace current hand methods. If they purchase the machine for $5000 in June, at the beginning of the canning season, they will save $500 per month for the 4 months each year that the plant is in operation. Maintenance costs the case-sealing machine are expected to be negligible. The case-sealing machine is expected to be useful for five annual canning seasons and then will have no salvage value. What is the nominal annual rate of return as a percentage?
Transcribed Image Text:A cannery is considering installing an automatic case-sealing machine to replace current hand methods. If they purchase the machine for $5000 in June, at the beginning of the canning season, they will save $500 per month for the 4 months each year that the plant is in operation. Maintenance costs the case-sealing machine are expected to be negligible. The case-sealing machine is expected to be useful for five annual canning seasons and then will have no salvage value. What is the nominal annual rate of return as a percentage?
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