FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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12q-14
Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $180,000 and
would have a twelve-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $26,000 per year to operate and maintain, but would save
$58,000 per year in labor and other costs. The old machine can be sold now for scrap for $18.000. The simple rate of return on the new machine is closest to (Ignore income taxes.): (Round
your answer to 1 decimal place.)
Multiple Choice
9.44%
32.22%
20.99%
10.49%
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Transcribed Image Text:Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $180,000 and would have a twelve-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $26,000 per year to operate and maintain, but would save $58,000 per year in labor and other costs. The old machine can be sold now for scrap for $18.000. The simple rate of return on the new machine is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.) Multiple Choice 9.44% 32.22% 20.99% 10.49%
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