Larrys Service Center just purchased an automobile hoist for $35,000. The hoist has a 6-year life and an estimated salvage value of $5,000. Larry uses straight-line depreciation. The companys required rate of return is 8%.

The new hoist will be used to replace mufflers on automobiles. Larrys estimates that the new hoist will enable his mechanics to replace 6 extra mufflers per week. Each muffler sells for $80 installed. The cost of a muffler is $40 and the labor cost to install a muffler is $10. The shop is open 52 weeks each year.

- Annual straight-Line Depreciation Expense:

- Net Annual Cash Inflow:

- Average Annual Net Income:

- Average Investment:

- Compute the cash payback period:

- Compute the annual rate of return:

- Compute the net present value (assume PVF= 0.5403 and PVAF= 5.7466):

- Should the hoist be purchased?

( Show work please )