Maui Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of $125
,000 with a $15,000 residual value and an eight-year life. The equipment will replace one employee who has an average wage of $28,000 per year. In addition, the equipment will have operating and energy costs of $5,150 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment. If required, round to the nearest whole percent.
Understored refers to a situation when an area have less sellers for a certain product than it actually needed. When this happen, most of the demand in that area would fall to the hands of one or only a select few of stores. This basically ensure high profitability for these stores.