A piece of labor$-$saving equipment has just come onto the market that Mitsui Electronics, Limited, could use to reduce costs in one of

its plants in Japan. Relevant data relating to the equipment follow:

Purchase cost of the equipment

Annual cost savings that will be provided

by the equipment

Life of the equipment

$$392,000$

$$80,000$

$10$ years

Required:

$1$a$.$ 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?

$2$a$.$ Compute the simple rate of return on the equipment. Use straight$-$line depreciation based on the equipment's useful life.

$2$ b$.$ Would the equipment be purchased if the company's required rate of return is $16\%?$

Complete this question by entering your answers in the tabs below.

Req $1A$

Compute the payback period for the equipment. $($Round your answer to $1$ decimal place.$)$