Exercise 13-13 Payback period and Simple Rate of Return Computations (L013-1, 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: $425,000 Purchase cost of the equipment Annual cost savings that will be provided by the equipment Life of the equipment $ 85,000 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 12%? Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2A Reg 28 Compute the payback period for the equipment. (Round your answer to 1 decimal place.) Payback Period Years (Reu1 Reg 18 > piece of labor-saving equipment has just come onto the market that Mitsui Electronics, Ltd., could use to reduce costs in one of plants in Japan. Relevant data relating to the equipment follow: $425,000 Purchase cost of the equipment Annual cost savings that will be provided by the equipment Life of the equipment $ 85,000 10 years Required: 1a. Compute the payback period for the equipment. 15. 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 12%? Complete this question by entering your answers in the tabs below. Reg 2A Reg 1A Reg 10 Reg 28 If the company requires a payback period of four years or less, would the equipment be purchased? Ores O No -piece of labor-saving equipment has just come onto the market that Mitsui Electronics, Ltd., could use to reduce costs in one of its lants in Japan. Relevant data relating to the equipment follow. $425,000 Purchase cost of the equipment Annual cost savings that will be provided by the equipment Life of the equipment $ 85,000 10 years Required: 1a. Compute the payback period for the equipment. 16. 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 12%? Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2A Reg 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 %
