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The management of Stanforth Corporation is investigating automating a process. Old equipment, with a current salvage value of $24,000, would be replaced by a new machine. The new machine would be purchased for $516,000 and would have a 6 year useful life and no salvage value. By automating the process, the company would save $173,000 per year in cash operating costs. The simple rate of return on the investment is closest to:
Paid-In Capital
Money that investors have given to a corporation in exchange for equity, representing the capital contribution from shareholders when issuing and selling shares.
Common Stock
A type of security that represents ownership in a corporation, with holders typically having voting rights and receiving dividends.
Organizational Expenses
Costs related to the formation of a corporation, partnership, or other enterprise, such as legal fees and state incorporation fees.
Cash Dividend
A corporation distributes its profits to its shareholders in cash form.
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