Ccorporation is investigating automating a process by purchasing a machine for $810,000 that would have a 9 year useful life and no salvage value. by automating the process, the company would save $142,000 per year in cash operating costs. the new machine would replace some old equipment that would be sold for scrap now, yielding $23,000. the annual depreciation on the new machine would be $90,000. the simple rate of return on the investment is closest to (ignore income taxes.):

6.61%

Explanation:

Given that,

Cash savings of the company = $142,000;

Depreciation on the new machine = $90,000

Net Income = Cash savings of the company -  Depreciation on the new machine

                    = $142,000 - $90,000

                     = $52,000

Old machine that is  sold for scrap with a value = $23,000

New equipment purchased = $810,000;

Net Cash Flows in Year 0:

= New equipment purchased -  Value of Old machine that is  sold for scrap

= $810,000 - $23,000

= $787,000

Simple rate of return on Investment:

= Net Income ÷ Net Cash flows on Investment

= $52,000 ÷ $787,000

= 6.60736

= 6.61%

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answer; ///hong kong;