Pro-Mate, Inc. is a producer of athletic equipment. The company is considering the purchase of a machine to produce baseball bats. The machine will cost $60,000 and have a 10-year useful life. The following annual revenues and expenses are projected:

The machine will have no salvage value. Assume cash flows occur uniformly throughout a year except for the initial investment.

The simple rate of return would be about:

	26.7%
	16.7%
	25.0%
	40.0%

Transcribed Image Text:

Sales..... Less expenses: Out-of-pocket production costs .... Selling expenses. Depreciation......... Net operating income. $15,000 9,000 6,000 $40,000 30,000 $10,000 Sales..... Less expenses: Out-of-pocket production costs .... Selling expenses. Depreciation......... Net operating income. $15,000 9,000 6,000 $40,000 30,000 $10,000

Answer rating: 100% (QA)

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