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The management of Ro Corporation is investigating automating a process. Old equipment, with a current salvage value of $12.000, would be replaced by a new machine. The new machine would be purchased for $444,000 and would have a 6 year useful life and no salvage value. By automating the process, the company would save $153,000 per year in cash operating costs. The simple rate of return on the investment is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.) Multiple Choice 18.3% 17.8% 34.5% 16.7%

The management of Ro Corporation is investigating automating a process. Old equipment, with a current salvage value of $12.000, would be replaced by a new machine. The new machine would be purchased for $444,000 and would have a 6 year useful life and no salvage value. By automating the process, the company would save $153,000 per year in cash operating costs. The simple rate of return on the investment is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.) Multiple Choice 18.3% 17.8% 34.5% 16.7%

FINANCIAL ACCOUNTING
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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The management of Ro Corporation is investigating automating a process. Old equipment, with a current salvage value of $12,000, would be replaced by a new machine. The new machine would be purchased for $444,000 and would have a 6 year useful life and no salvage value. By automating the process, the company would save $153,000 per year in cash operating costs. The simple rate of return on the investment is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.) Multiple Choice 18.3% 17.8% 34.5% 16.7% O O O
Transcribed Image Text:The management of Ro Corporation is investigating automating a process. Old equipment, with a current salvage value of $12,000, would be replaced by a new machine. The new machine would be purchased for $444,000 and would have a 6 year useful life and no salvage value. By automating the process, the company would save $153,000 per year in cash operating costs. The simple rate of return on the investment is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.) Multiple Choice 18.3% 17.8% 34.5% 16.7% O O O
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