Question
Legend Service Center just purchased an automobile hoist for $31,200. The hoist has an 8-year life and an estimated salvage value of $3,330. Installation costs
Legend Service Center just purchased an automobile hoist for $31,200. The hoist has an 8-year life and an estimated salvage value of $3,330. Installation costs and freight charges were $3,830 and $890, respectively. Legend uses straight-line depreciation. The new hoist will be used to replace mufflers and tires on automobiles. Legend estimates that the new hoist will enable his mechanics to replace 6 extra mufflers per week. Each muffler sells for $72 installed.
The cost of a muffler is $38, and the labor cost to install a muffler is $14.
(a) Compute the cash payback period for the new hoist. (Round answer to 2 decimal places, e.g. 10.50.) Cash payback period Entry field with correct answer 5.76 years
(b) Compute the annual rate of return for the new hoist. (Round answer to 1 decimal place, e.g. 10.5.) Annual rate of return Entry field with incorrect answer 6 %
i have also tried 7.7, 17.4 and all are incorrect for B, can you explain in detail B I only have 1 more chance at getting it correct,
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started