Exercise Algo Simple Rate of Return Method LO
Ballard MicroBrew is considering the purchase of an automated bottling machine for $ The machine would replace an old piece of equipment that costs $ per year to operate. The new machine would cost $ per year to operate. The old machine currently in use is fully depreciated and could be sold now for a salvage value of $ The new machine would have a useful life of years with no salvage value.
Required:
What is the annual depreciation expense associated with the new bottling machine?
What is the annual incremental net operating income provided by the new bottling machine?
What is the initial investment used for calculating the machine's simple rate of return?
What is the simple rate of return on the new bottling machine?
Note: Round your answer to decimal place ie should be considered as
table Depreciation expense,, Incremental net operating income,, Initial investment,, Simple rate of return,,
