Denny Corporation Is Considering Replacing a Technologically Obsolete Machine with a New

question 367

Multiple Choice

Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $230,000 and would have a ten-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $36,000 per year to operate and maintain, but would save $75,000 per year in labor and other costs. The old machine can be sold now for scrap for $23,000. The simple rate of return on the new machine is closest to (Ignore income taxes.) : (Round your answer to 1 decimal place.)

• A) 6.96%
• B) 32.61%
• C) 15.46%
• D) 7.73%

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Definitions:

Globalization

The process of interaction and integration among people, companies, and governments worldwide, leading to the global exchange of goods, services, cultural practices, and ideas.

Acceleration

The rate at which an object increases its velocity over time, often discussed in physics.

Deceleration

The process of slowing down or reducing speed.

Middle Class

A socio-economic class between the working class and upper class, typically associated with moderate income, higher education levels, and stable employment.