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(Ignore Income Taxes in This Problem

question 87

Essay

(Ignore income taxes in this problem.) The management of Moya Corporation is investigating purchasing equipment that would cost $336,000 and have an 8 year life with no salvage value. The equipment would allow an expansion of capacity that would increase sales revenues by $288,000 per year and cash operating expenses by $164,000 per year.
Required:
Determine the simple rate of return on the investment to the nearest tenth of a percent. Show your work!


Definitions:

Direct Approach

A communication style that involves stating the main point or objective at the beginning, followed by supporting details.

Justification

The reasoning or explanation behind a decision, action, or belief, demonstrating its validity.

Formal Complaint

An official report or allegation made by an individual or group regarding misconduct or dissatisfaction with a service or situation.

Claim Against A Company

A formal complaint or request for compensation made by an individual or entity due to dissatisfaction with a company's product or service.

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