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What is the simple rate of return on the new machine

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Question - Blaine Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $300,000 and would have a fifteen-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $50,000 per year to operate and maintain, but would save $91,000 per year in labor and other costs. The old machine can be sold now for scrap for $30,000. What is the simple rate of return on the new machine? (Ignore income taxes.)

7.00%

30.33%

7.78%

15.56%

Reference no: EM132061593

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