Adams Manufacturing Company is considering purchasing a machine that could reduce labor costs in one of its facilities in North Carolina. The relevant information for the machine follow: Purchase cost of the machine Annual cost savings that will be provided by the machine Life of the machine $329,000 $ 70,000 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 machine be purchased? 2a Compute the simple rate of return on the machine. Use straight-line depreciation based on the machine's useful life. 2b. Would the machine be purchased if the company's required rate of return is 14%? Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Req 2A Reg 28 Compute the payback period for the equipment. (Round your answer to 1 decimal place.) Required: 1a Compute the payback period for the equipment. 1b. If the company requires a payback period of four years or less, would the machine be purchased? 2a. Compute the simple rate of return on the machine. Use straight-line depreciation based on the machine's useful life. 2b. Would the machine 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 Reg 1B Req 2A Reg 28 Compute the payback period for the equipment. (Round your answer to 1 decimal place.) Payback period years Required: la Compute the payback period for the equipment 16. If the company requires a payback period of four years or less, would the machine be purchased? 2a. Compute the simple rate of return on the machine Use straight-line depreciation based on the machine's useful life, 26. Would the machine be purchased if the company's required rate of return is 14%? Complete this question by entering your answers in the tabs below. Reg 1A Req 18 Reg 2A Reg 28 If the company requires a payback period of four years or less, would the equipment be purchased? Yes No Required: 1a Compute the payback period for the equipment 1b. If the company requires a payback period of four years or less, would the machine be purchased? 2a. Compute the simple rate of return on the machine. Use straight-line depreciation based on the machine's useful life 2b. Would the machine be purchased if the company's required rate of return is 14%? Complete this question by entering your answers in the tabs below. Req1A Req 1B Reg 2A Req 28 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 % Required: 1a Compute the payback period for the equipment. 1b. If the company requires a payback period of four years or less, would the machine be purchased? 2a Compute the simple rate of return on the machine. Use straight-line depreciation based on the machine's useful life 2b. Would the machine be purchased if the company's required rate of return is 14%? Complete this question by entering your answers in the tabs below. Reg 1A Req 18 Req 2A Req 2B Would the equipment be purchased if the company's required rate of return is 14%? Yes ONO
