Question
In: Accounting
A piece of labor-saving equipment has just come onto the market that Mitsui Electronics, Ltd., could...
A piece of labor-saving equipment has just come onto the market that Mitsui Electronics, Ltd., could use to reduce costs in one of its plants in Japan. Relevant data relating to the equipment follow:
| Purchase cost of the equipment | $ | 484,500 |
| Annual cost savings that will be provided by the equipment |
$ | 85,000 |
| Life of the equipment | 12 years | |
Required:
1a. Compute the payback period for the equipment.
1b. If the company requires a payback period of four years or less, would the equipment be purchased?
2a. Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment’s useful life.
2b. Would the equipment be purchased if the company’s required rate of return is 14%?
Solutions
Expert Solution
The answer has been presented to the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.
ekkarill92 answered 1 year agoRelated Solutions
A piece of labor-saving equipment has just come onto the market that Mitsui Electronics, Ltd., could...
A piece of
labor-saving equipment has just come onto the market that Mitsui
Electronics, Ltd., could use to reduce costs in one of its plants
in Japan. Relevant data relating to the equipment follow:
Purchase cost of
the equipment
$
392,000
Annual cost
savings that will be
provided by the equipment
$
80,000
Life of the
equipment
10 years
Required:
1a. Compute the
payback period for the equipment.
1b. If the company
requires a payback period of four years or...
A piece of labor-saving equipment has just come onto the market that Mitsui Electronics, Ltd., could...
A piece of labor-saving equipment has just come onto the market
that Mitsui Electronics, Ltd., could use to reduce costs in one of
its plants in Japan. Relevant data relating to the equipment
follow:
Purchase cost of the equipment
$
640,500
Annual cost savings that will be
provided by the equipment
$
105,000
Life of the equipment
10 years
Required:
1a. Compute the payback period for the equipment.
1b. If the company requires a payback period of four years or...
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follow:
Purchase cost of the equipment
$
530,000
Annual cost savings that will be
provided by the equipment
$
100,000
Life of the equipment
10 years
Required:
1-a.
Compute the payback period for the equipment.
Payback Period
Choose Numerator:
/
Choose Denominator:
=
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A piece of laborsaving equipment has just come onto the market that Mitsui Electronics, Ltd., could...
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its plants in Japan. Relevant data relating to the equipment
follow:
Purchase cost of the equipment
$
270,000
Annual cost savings that will be
provided by the equipment
$
60,000
Life of the equipment
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Required:
1-a.
Compute the payback period for the equipment.
Payback Period
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/
Choose Denominator:
=
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