Compute the simple rate of return for the machine

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Alesi Corporation is considering purchasing a machine that would cost $510,510 and have a useful life of 8 years. The machine would reduce cash operating costs by $100,100 per year. The machine would have a salvage value of $107,290 at the end of the project. (Assume the company uses straight-line depreciation.)

Required:

Problem a. Compute the payback period for the machine. (Round your answer to 2 decimal places.)

Problem b. Compute the simple rate of return for the machine. (Round your intermediate answers to nearest whole dollar and your final answer to 2 decimal places.)

Reference no: EM132971602

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