Assume a machine that has a useful life of only one year costs $2,000. Assume, also, that net of such operating costs as power, taxes, and so forth, the additional revenue from the output of this machine is expected to be $2,300. The expected rate of return on this machine is:

A. 20 percent.

B. 7.5 percent.

C. 10 percent.

D. 15 percent

Question

Business

Edgar Erickson

17 March, 08:01

Assume a machine that has a useful life of only one year costs $2,000. Assume, also, that net of such operating costs as power, taxes, and so forth, the additional revenue from the output of this machine is expected to be $2,300. The expected rate of return on this machine is:

A. 20 percent.

B. 7.5 percent.

C. 10 percent.

D. 15 percent

+3

Answers (1)

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Marcelo Blankenship · Answer 1

D. 15 percent

Explanation:

Cost of the machine = $2,000

Having considered operating costs as power, taxes, and so forth, the additional revenue from the output of this machine is expected to be $2,300

Expected return = $2,300 - $2,000

= $300

Therefore, the rate of returns

= Returns/cost

=300/2000

= 0.15

In Percentage, 15%. The expected rate of return on this machine is 15%