Midwest Fabricators Inc. is considering an investment in equipment that will replace direct labor. The...
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Midwest Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of $97,000 with a $8,000 residual value and a five-year life. The equipment will replace one employee who has an average wage of $30,380 per year. In addition, the equipment will have operating and energy costs of $9,430 per year.
Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment. If required, round to the nearest whole percent. %
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