Average Rate of Return-Cost Savings Sager Industries is considering an investment in equipment that will replace direct labor. The equipment has a cost of $91,000 with a $8,000 residual value and a 10-year life. The equipment will replace three employees who has an average total wages of $18,640 per year. In addition, the equipment will have operating and energy costs of $4,400 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment. %

Average Rate of Return-Cost Savings Sager Industries is considering an investment in equipment that will replace direct labor. The equipment has a cost of $91,000 with a $8,000 residual value and a 10-year life. The equipment will replace three employees who has an average total wages of $18,640 per year. In addition, the equipment will have operating and energy costs of $4,400 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment. %

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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