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

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
$682,000
$110,000
10 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%?
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.)
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