Corporation is investigating automating a process

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Reference no: EM131291971

(Ignore income taxes in this problem.) The management of Stanforth Corporation is investigating automating a process. Old equipment, with a current salvage value of $21,000, would be replaced by a new machine. The new machine would be purchased for $378,000 and would have a 6 year useful life and no salvage value. By automating the process, the company would save $131,000 per year in cash operating costs. The simple rate of return on the investment is closest to:

19.0%

18.0%

34.7%

16.7%

Reference no: EM131291971

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