Exercise 13-13 Payback Period and Simple Rate of Return Computations [LO13-1, LO13-6] 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: Purchase cost of the equipment Annual cost savings that wi1l be $392,000 $ 80,000 10 years provided by the equipment Life of the equipment 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 16%? Complete this question by entering your answers in the tabs below. Req 1AReq 1B Compute the payback period for the equipment.(Round your answer to 1 decimal place.) Payback Period Req 2A Req 2B Years Req 2B Req 2A Req 1A Req 1B If the company requires a payback period of four years or less, would the equipment be purchased? 0% ONo Yes Req 1B Req 2A Req 2B Req 1A 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 ie. 0.123 should be considered as 12.3%.) Simple Rate of Return r | % Req 1B Req 2B Req 1A Would the equipment be purchased if the company's required rate of return is 16%? OYes Req 2A ONo