value 2.00 points The management of Ballard MicroBrew is considering the purchas

Question

value 2.00 points The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $43,000. The machine would replace an old piece of equipment that costs $11,000 per year to operate. The new machine would cost $5,000 per year to operate. The old machine currently in use is fully depreciated and could be sold now for a scrap value of $17,000. 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 automated bottling machine Simple rate of return Choose Numerator: I Choose Denominator:Simple Rate of Return Simple rate of return 01%

Explanation / Answer

Calculations:

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Simple rate of return Choose Numerator: / Choose Denominator: = Simple rate of return Incremental net operating income / Net investment = Simple rate of return 1700 / 26000 = 6.54%

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