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ABC Steel Co. is considering buying a new machine in order to increase its production...

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Accounting

ABC Steel Co. is considering buying a new machine in order to increase its production capacity using new technology. Details about the new equipment are below:

Purchase Cost $300,000

Savings offered by the new machine $62,500 per year

Life of the new machine 15 years

Calculate the simple rate of return of the equipment using the straight-line depreciation method based on the new machines useful life.

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