Compute the simple rate of return for the machine

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Reference no: EM13790112

Brewer Company is considering purchasing a machine that would cost $369,450 and have a useful life of 6 years. The machine would reduce cash operating costs by $82,100 per year. The machine would have a salvage value of $107,110 at the end of the project. (Ignore income taxes.)

Required:

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

Payback period: _____ years

b. Compute the simple rate of return for the machine. (Round your intermediary answers to nearest whole dollar and your final answer to 2 decimal places. Omit the "%" sign in your response.

Simple rate of return: ______%

Reference no: EM13790112

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