Compute the machine simple rate of return

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Question 1: A company is considering buying a new machine for $40,000. The machine is expected to save the company $16,000 for each of the next 5 years. The cost of the machine will be depreciated evenly over the next 5 years, with no salvage value. Compute the machine's simple rate of return. Ignore income taxes.

a) 30%

b) 10%

c) 15%

d) 20%

Reference no: EM132585956

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