The Management of Kleppe Corporation Is Investigating Automating a Process

question 109

Essay

The management of Kleppe Corporation is investigating automating a process by replacing old equipment by a new machine. The old equipment would be sold for scrap now for $19,000. The new machine would cost $180,000, would have a 9 year useful life, and would have no salvage value. By automating the process, the company would save $30,000 per year in cash operating costs.
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:

Dopamine

A neurotransmitter in the brain that plays key roles in regulating mood, sleep, attention, and learning, often associated with the pleasure and reward system.

Hot Flashes

Sudden feelings of warmth, often associated with menopause, that are usually most intense in the head and neck regions.

Hyperthermia

A condition characterized by an abnormally high body temperature, often a result of prolonged exposure to high temperatures or medical conditions.

Perimenopause

A period of gradual changes and adjustments a woman’s body goes through prior to menopause, before menstruation stops completely.