(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!

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Definitions:

Carbohydrates

Organic compounds, such as sugars, starches, and cellulose, that are an important source of energy for living organisms.

Amylase

is an enzyme that helps in the digestion of carbohydrates by breaking them down into sugars, found in saliva and pancreatic fluid.

Saliva

A clear liquid secreted by the salivary glands in the mouth, which helps in digestion and maintains oral hygiene.

Nutrient Absorption

The process by which substances such as vitamins and minerals from food are taken up into the bloodstream from the digestive tract.