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    cinbad0406's Avatar
    cinbad0406 Posts: 1, Reputation: 1
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    #1

    Oct 3, 2011, 07:01 PM
    The equipment has a cost of $85,000, with a $5,000 residual value and a 10-year life.
    Average rate of returncost savings

    International Fabricators Inc. Is considering an investment in equipment that will replace direct labor. The equipment has a cost of $85,000, with a $5,000 residual value and a 10-year life. The equipment will replace one employee who has an average wage of $23,000 per year. In addition, the equipment will have operating and energy costs of $6,000 per year.

    Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment. Do not enter the percent sign.
    Unknown008's Avatar
    Unknown008 Posts: 8,076, Reputation: 723
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    #2

    Oct 4, 2011, 01:45 AM
    Can you firstly get the annual depreciation on the equipment?
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