The Jason Company Is Considering the Purchase of a Machine

question 76

Multiple Choice

The Jason Company is considering the purchase of a machine that will increase revenues by $32,000 each year.Cash outflows for operating this machine will be $6,000 each year.The cost of the machine is $65,000.It is expected to have a useful life of five years with no salvage value.For this machine,what is the simple rate of return? (Ignore income taxes in this problem.)

• A) 9.2%.
• B) 20.0%.
• C) 40.0%.
• D) 49.2%.

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