(Ignore Income Taxes in This Problem

question 26

Essay

(Ignore income taxes in this problem.)The management of Schenk Corporation is investigating automating a process by replacing old equipment by a new machine.The old equipment would be sold for scrap now for $13,000.The new machine would cost $648,000,would have a 9 year useful life,and would have no salvage value.By automating the process,the company would save $186,000 per year in cash operating costs.
Required:
Determine the simple rate of return on the investment to the nearest tenth of a percent.Show your work!

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