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Mitsui Electronics, Limited, is considering buying a labor-saving pierce of equipment and provided the following data: Purchase cost of the equipment Annual cost savings
Mitsui Electronics, Limited, is considering buying a labor-saving pierce of equipment and provided the following data: Purchase cost of the equipment Annual cost savings that will be provided by the equipment Life of the equipment Required: $ 560,500 $ 95,000 10 years 1a. Compute the payback period for the equipment. 1b. If the company requires a payback period of four years or less, would it buy the equipment? 2a. Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment's useful life. 2b. Would the company buy the equipment if its required rate of return is 16%? Complete this question by entering your answers in the tabs below. Required 1A Required 1B Required 2A Required 2B Compute the payback period for the equipment. Note: Round your answer to 1 decimal place. Payback Period Years Required 1A Required 1B >
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