Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

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: $682,000 Purchase cost of the equipment Annual cost savings that will be provided by the equipment Life of the equipment $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 Req 1B Req 2A Req 2B Compute the payback period for the equipment. (Round your answer to 1 decimal place.) Payback period years Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B If the company requires a payback period of four years or less, would the equipment be purchased? Yes NO Req 1A Req 2A > Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Req 2A Req 2B Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment's useful life. (Round your answer to 1 decimal place i.e. 0.123 should be considered as 12.3%.) Simple rate of return % Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req ZA Req 2B Would the equipment be purchased if the company's required rate of return is 14%? Yes No Req 2A REQ 2B >

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Principles And Practice Of Auditing

Authors: George Puttick, Sandra Van Esch

7th Edition

0702137723, 978-0702137723

More Books

Students also viewed these Accounting questions

Question

2. How do these vengeful heroes exorcise their daemons?

Answered: 1 week ago

Question

How reliable is this existing information?

Answered: 1 week ago