Determine the simple rate of return

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Reference no: EM1311558

Determine the simple rate of return on the new automated bottling machine.

The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $120,000. The machine would replace an old piece of equipment that costs $30,000 per year to operate. The new machine would cost $12,000 per year to operate. The old machine currently in use could be sold now for a scrap value of $40,000. The new machine would have a useful life of 10 years with no salvage value.

Required:

Compute the simple rate of return on the new automated bottling machine.

Reference no: EM1311558

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