The management of Ro Corporation is investigating automating a process. Old equipment, with a current...
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The management of Ro Corporation is investigating automating a process. Old equipment, with a current salvage value of $12,000, would be replaced by a new machine. The new machine would be purchased for $402,000 and would have a 6 year useful life and no salvage value. By automating the process, the company would save $139,000 per year in cash operating costs. The simple rate of return on the investment is closest to (Ignore income taxes.):
Multiple Choice
18.5%
16.7%
34.6%
17.9%
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