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%

---

Definitions:

Neurons

Specialized cells of the nervous system that transmit information to other nerve cells, muscle, or gland cells through electrical and chemical signals.

Receive Messages

The process of successfully perceiving or understanding messages communicated by others, through verbal or non-verbal means.

Send Messages

The act of transmitting information or communication from one’s person, place, or electronic device to another.

Dendrites

Branch-like extensions of neurons that receive signals from other neurons.