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Simple rate of return on the investment

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The management of Kissinger Corporation is investigating automating a process. Old equipment, with a current salvage value of $23,000, would be replaced by a new machine. The new machine would be purchased for $330,000 and would have a 6 year useful life and no salvage value. By automating the process, the company would save $108,000 per year in cash operating costs. The simple rate of return on the investment is closest to:

a) 17.3%

b) 16.1%

c) 16.7%

d) 32.7%

Reference no: EM13129594

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