What is the return on investment on the purchase of the new equipment?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question 2
Kappa Company is considering the purchase of some new equipment to replace its old, worn-out equipment. The new equipment will
cost $365,000 and provide additional annual cash flows of $92,000. The firm will also take $28,620 of additional depreciation each
year due to the new machine. Kappa can sell its old equipment for salvage for $11,210 at the same time they buy the new equipment.
What is the return on investment on the purchase of the new equipment?
Round your answer to the nearest tenth of a percent.
A
B
1 Return on Investment
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