Crowl Corporation Is Investigating Automating a Process by Purchasing a Machine

question 149

Multiple Choice

Crowl Corporation is investigating automating a process by purchasing a machine for $809,100 that would have a 9 year useful life and no salvage value. By automating the process, the company would save $141,500 per year in cash operating costs. The new machine would replace some old equipment that would be sold for scrap now, yielding $22,900. The annual depreciation on the new machine would be $89,900. The simple rate of return on the investment is closest to (Ignore income taxes.) : (Round your answer to 1 decimal place.)

• A) 11.29%
• B) 16.89%
• C) 6.56%
• D) 5.29%