Depreciation expense = (57,000-0)/10 = 5700 |
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Incremental net operating income = 15,000 - 7,000 - Depreciation 5700 = 2,300 |
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Initial investment = 57,000 - Salvage value of old machine 24,000 = 33,000 |
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Simple rate of return = Incremental net operating income/Initial investment = 2,300/33,000 = 6.7% |
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