A piece of laborsaving equipment has just come onto the market that Mitsui Electronics LTK. Could use to reduce the costs in one of its plants in Japan. Relevant data relating to the equipment follow: Purchase cost of the equipment $484,500 Anmual cost savings that will be provided by the equipment $85,000 Life of the equipment 12 years Compute the payback period for the equipment

Choose numerator choose denominator ________________/____________ = payback period

Choose numerator choose denominator = _______ / __________ = _____ years 1-b If the company requires a payback period of four years or less, would the equipment be purchased? (yes or nO)

2-a Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipments useful life. Simple Rate of Return Choose numerator choose denominator ________________/____________ = Simple Rate of Return Choose numerator choose denominator = _______ / __________ = _____ %

2-b would the equipment be purchased if the companys required rate of return is 14%.