Ramson Corporation is considering purchasing a machine that would cost $510,510 and have a useful life of 8 years. The machine would reduce cash operating costs by $100,100 per year. The machine would have a salvage value of $107,290 at the end of the project. (Ignore income taxes.) Required: a. Compute the payback period for the machine. (Round your answer to 2 decimal places.) b. Compute the simple rate of return for the machine. (Round your intermediate calculations to nearest whole dollar and your final answer to 2 decimal places.) a. Payback period b. Simple rate of return years %
Ramson Corporation is considering purchasing a machine that would cost $510,510 and have a useful life of 8 years. The machine would reduce cash operating costs by $100,100 per year. The machine would have a salvage value of $107,290 at the end of the project. (Ignore income taxes.) Required: a. Compute the payback period for the machine. (Round your answer to 2 decimal places.) b. Compute the simple rate of return for the machine. (Round your intermediate calculations to nearest whole dollar and your final answer to 2 decimal places.) a. Payback period b. Simple rate of return years %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Ramson Corporation is considering purchasing a machine that would cost $510,510 and have a useful life of 8 years. The machine
would reduce cash operating costs by $100,100 per year. The machine would have a salvage value of $107,290 at the end of the
project. (Ignore income taxes.)
Required:
a. Compute the payback period for the machine. (Round your answer to 2 decimal places.)
b. Compute the simple rate of return for the machine. (Round your intermediate calculations to nearest whole dollar and your final
answer to 2 decimal places.)
la. Payback period
b. Simple rate of return
years
%
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