Hinck Corporation Is Investigating Automating a Process by Purchasing a New

question 11

Essay

Hinck Corporation is investigating automating a process by purchasing a new machine for $520,000 that would have a 8 year useful life and no salvage value. By automating the process, the company would save $134,000 per year in cash operating costs. The company's current equipment would be sold for scrap now, yielding $22,000. The annual depreciation on the new machine would be $65,000.
Required:
Determine the simple rate of return on the investment to the nearest tenth of a percent. Show your work!

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Definitions:

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