Messersmith Corporation Is Investigating Automating a Process by Purchasing a Machine

question 108

Multiple Choice

Messersmith Corporation is investigating automating a process by purchasing a machine for $688,000 that would have an 8 year useful life and no salvage value. By automating the process, the company would save $160,000 per year in cash operating costs. The new machine would replace some old equipment that would be sold for scrap now, yielding $19,000. The annual depreciation on the new machine would be $86,000. The simple rate of return on the investment is closest to:

• A)23.3%
• B)11.1%
• C)10.8%
• D)12.5%

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Definitions:

Parallelism

The concurrent execution of multiple tasks or processes in computing to enhance performance.

Hedging

The use of language to express uncertainty or to lessen the impact of a statement, often to appear more polite or to avoid commitment.

Conciseness

The quality of being brief and to the point, eliminating unnecessary words while conveying an idea clearly.

Unnecessary Words

Superfluous words or phrases in a text that do not add meaningful information and can be removed without loss of clarity.