The new machine cost $320,000 16 years of useful life no salvage value new machine cost $54,000 per year to operate and maintain saves $95,000 per year in labor and other costs old machine can be sold now for scrap for the $32,000.
The simple rate of return on the new machine is _____.
Simple Rate of Return:
The simple rate of return is a performance evaluation metric that shows the relationship between average net income and the initial investment of the asset. It is calculated by dividing the net income by the initial investment.
Answer and Explanation: 1
The question provides the following information -
- Annual savings = $95,000
- Annual costs = $54,000
- New machine cost = $320,000
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fromChapter 8 / Lesson 8
Learn about the simple rate of return and understand how it is used in a business. Discover how to calculate the simple rate of return formula with examples.