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Mercer corporation is considering replacing a

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Mercer Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $250,000 and would have a ten-year useful  life. Unfortunately, the new machine would have no salvage value. The new machine would cost $12,000 per year to operate and maintain, but would save $55,000 per year  in labor and other costs. The old machine can be sold now for scrap for $10,000. The simple rate of return on the new machine is closest to:

A) 17.9%

B) 7.5%

C) 22.0%

D) 7.2%

Reference no: EM13567134

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