The management of Stanforth Corporation is investigating automating a process. Old equipment, with a current salvage value of $24,000, would be replaced by a new machine. The new machine would be purchased for $468,000 and would have a 6 year useful life and no salvage value. By automating the process, the company would save $161,000 per year in cash operating costs. The simple rate of return on the investment is closest to.

Simple rate of return = 17.7%

Explanation:

Simple rate of return = incremental operating income ÷ initial investment

Depreciation = $468,000 ÷ 6years = $78,000

incremental operating income = $161,000-$78,000 =$83,000

Simple rate of return = $83,000÷$468,000=17.7%

The simple rate of return on investment is 17.73%

Explanation:

The simple interest rate of return on the investment can be calculated by the formula given thus:

Simple rate of return=net income/investment

The net income =savings in operating costs less depreciation

Savings in operating costs =$161000

depreciation=cost -salvage value/number of years

Depreciation=468000-0/6=$78000

Net income=$161000-$78000

Net income=$83000

Simple rate of return =83000/468000

                                    =17.73%

Role in the economy can be broken down into two basic sets of functions. it attempts to promote economic stability and growth, and it attempts to regulate and control the economy. The federal government regulates and controls the economy through numerous laws affecting economic activity.