Question

rencontres in this problem Mercer Corporn com a technically machine w w e would have n ever would co$52.000 per year to be pe


othermal corted machine. The reachinewoud.co 50.000 and would Prore income in this problem Mercat Corporation is considering
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Answer #1

Solution:

Net operating income from new machine = Savings in labor and other cost - Operation and maintenance cost - Depreciation

= $93,000 - $52,000 - ($310,000/10) = $10,000

Simple rate of return = Net operating income / Initial investment = $10,000 / $310,000 = 3.23%

Hence 2nd option is correct.

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