Mercer Corporation is considering replacing a technologically obsolete machine with a new state$-$of$-$the$-$art

numerically controlled machine. The new machine would cost $$250,000$ and would have a ten$-$year useful life.

Unfortunately, the new machine would have no salvage value. The new machine would cost $$12,000$ per year to

operate and maintain, but would save $$55,000$ per year in labor and other costs. The old machine can be sold

now for scrap for $$10,000.$ The simple rate of return on the new machine is closest to:

A$.17\mathrm{.}9\%$

B$.7\mathrm{.}5\%$

C$.22\mathrm{.}0\%$

D$.7\mathrm{.}2\%$

it says the answer is b$.7\mathrm{.}5\%$

Explaint how did they get it$.$