Question: Exercise 11-4 Simple Rate of Return Method [LO11-4] The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $57,000. The

Exercise 11-4 Simple Rate of Return Method [LO11-4]

The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $57,000. The machine would replace an old piece of equipment that costs $15,000 per year to operate. The new machine would cost $7,000 per year to operate. The old machine currently in use is fully depreciated and could be sold now for a scrap value of $25,000. The new machine would have a useful life of 10 years with no salvage value.

Required:

Compute the simple rate of return on the new automated bottling machine.

Simple rate of return
Choose Numerator:	/	Choose Denominator:	=	Simple Rate of Return
Annual incremental net operating income	/	Initial investment	=	Simple rate of return
	/		=	0	%

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