Denny Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $280,000 and would have a ten-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $46,000 per year to operate and maintain, but would save $87,000 per year in labor and other costs. The old machine can be sold now for scrap for $28,000. The simple rate of return on the new machine is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.)

Brewer_8e_Rechecks_2019_10_14

Multiple Choice

• 4.64%

• 31.07%

• 10.32%

• 5.16%