Question

Midwest Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of $ 132,000 with a $ 16,000 residual value and a 10- year life. The equipment will replace one employee who has an average wage of $ 34,000 per year. In addition, the equipment will have operating and energy costs of $ 5,380 per year.
Determine the average rate of return on the equipment, giving effect to straight- line depreciation on the investment.



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  • CreatedJune 27, 2014
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