(Ignore income taxes in this problem.) Sam Corporation is investigating automating a process by purchasing a new machine for $483,000 that would have a 7 year useful life and no salvage value. By automating the process that would increase sales revenues by $438,000 per year and cash operating expenses by $258,000 per year. The company's current equipment would be sold for scrap now, yielding $29,000. The annual depreciation on the new machine would be $69.000. Required: Determine the simple rate of return on the investment to the nearest tenth of a percent. Show your work!

(Ignore income taxes in this problem.) Sam Corporation is investigating automating a process by purchasing a new machine for $483,000 that would have a 7 year useful life and no salvage value. By automating the process that would increase sales revenues by $438,000 per year and cash operating expenses by $258,000 per year. The company's current equipment would be sold for scrap now, yielding $29,000. The annual depreciation on the new machine would be $69.000. Required: Determine the simple rate of return on the investment to the nearest tenth of a percent. Show your work!

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter12: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 10P: Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6...

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