1. The management of Ro Corporation is investigating automating a process. Old equipment, with a current salvage value of $27,000, would be replaced by a new machine. The new machine would be purchased for $474,000 and would have a 6-year useful life and no salvage value. By automating the process, the company would save $163,000 per year in cash operating costs. The simple rate of return on the investment is closest to (Ignore income taxes.)

a. 18.8%

b. 17.7%

c. 34.4%

d. 16.7%

2. In a statement of cash flows, a change in an income taxes payable account would be recorded in the:

a. operating activities section.

b. financing activities section.

c. investing activities section.

d. stockholders' equity section.

Answer rating: 100% (QA)

1 Annual incremental cost savings 163000 Annual depreciation 474000 06 79... View the full answer