connect Question 9 (of 9. 2.00 points Exercise 11-4 Simple Rate of Return Method
ID: 2431961 • Letter: C
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connect Question 9 (of 9. 2.00 points Exercise 11-4 Simple Rate of Return Method LO11-4] The management of Balard MicroBrew is considering the purchase of an automated bottling machine fo $59,000 The machine would replace an old piece of equipment that costs $15,000 per year to operate. The new machine would cost $7,000 per year to operate. The old machine currently in use is fuly depreciated and could be sold now for a scrap value of $25,000. The new machine would have a useful life of 10 years with no salvage value Required Compute the simple rate of return on the new autormated bottling machine Simple Rate of s Simple rate of return Choose Hints References eBook & Resources ?Explanation / Answer
New Machinery cost : $ 59000
Scrap value of old Machine : $ 25000
Effective Inevstment after reducing Scrap value of olf Machine : $34000
Decrease in per year operating cost By $ 8000
Simple rate of Return ( %)= 8000/34000=23.53%
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