Answer:
30.33%
Explanation:
The computation of the simple rate of return is shown below:
As we know that
Simple Rate of Return is
= Incremental Revenues - (Cash Operating Expenses + Depreciation expense ) ÷ Initial Investment
where,
Incremenal Revenues = $378,000
Cash Operating Expenses = $257,000
Depreciation is
= Cost of Equipment ÷ Usefull Life
= $300,000 ÷ 10 years
= $30,000
And, the Initial Investment is $300,000
Now putting these values to the above formula
So Simple Rate of Return is
= $378,000 - ($257,000 + $30,000) ÷ $300,000
= $378,000 - $287,000 ÷ $300,000
= $91,000 ÷ $300,000
= 30.33%
