(Ignore Income Taxes in This Problem

question 63

Multiple Choice

(Ignore income taxes in this problem.) The management of Ro Corporation is investigating automating a process.Old equipment,with a current salvage value of $11,000,would be replaced by a new machine.The new machine would be purchased for $243,000 and would have a 9 year useful life and no salvage value.By automating the process,the company would save $69,000 per year in cash operating costs.The simple rate of return on the investment is closest to:

• A) 18.1%
• B) 11.1%
• C) 28.4%
• D) 17.3%

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