Exercise $14-6($Algo$)$ Simple Rate of Return Method $[$LO$14-6]$

The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $\backslash (\backslash$$ $50,000\backslash ).$ The machine would replace an old piece of equipment that costs $\backslash (\backslash$$ $13,000\backslash )$ per year to operate. The new machine would cost $\backslash (\backslash$$ $6,000\backslash )$ per year to operate. The old machine currently in use is fully depreciated and could be sold now for a salvage value of $\backslash (\backslash$$ $21,000\backslash ).$ The new machine would have a useful life of $10$ years with no salvage value.

Required:

$1.$ What is the annual depreciation expense associated with the new bottling machine?

$2.$ What is the annual net operating income provided by the new bottling machine?

$($Remember that net operating income is equal to revenue less expenses. The revenue is the operation savings and the expense is the depreciation.$)$

$3.$ What is the amount of the initial investment associated with this project that should be used for calculating the simple rate of return? $($Remember to take the initial investment less the salvage of the OLD equipment.$)$

$4.$ What is the simple rate of return on the new bottling machine? $($Round your answer to $1$ decimal place i$.$e$.\backslash (\backslash$mathbf$\{0.123\}\backslash )$ should be considered as $\backslash (\backslash$mathbf$\{12.3\backslash \%.)\}\backslash )$