Midwest Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of $92,000 with a $8,000 residual value and a ten-year life. The equipment will replace one employee who has an average wage of $22,850 per year. In addition, the equipment will have operating and energy costs of $4,450 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment. If required, round to the nearest whole percent. %
Midwest Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of $92,000 with a $8,000 residual value and a ten-year life. The equipment will replace one employee who has an average wage of $22,850 per year. In addition, the equipment will have operating and energy costs of $4,450 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment. If required, round to the nearest whole percent. %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Midwest Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of $92,000 with a $8,000 residual value and a ten-year life. The equipment will replace one employee who has an average wage of $22,850 per year. In addition, the equipment will have operating and energy costs of $4,450 per year.
Determine the average rate of return on the equipment, giving effect to straight-line
%
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