Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Mitsui Electronics, Limited, is considering buying a labor-saving pierce of equipment and provided the following data: Purchase cost of the equipment $ 299,000 Annual cost

Mitsui Electronics, Limited, is considering buying a labor-saving pierce of equipment and provided the following data:

Purchase cost of the equipment $ 299,000
Annual cost savings that will be provided by the equipment $ 65,000
Life of the equipment 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 it buy the equipment?

2a. Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipments useful life.

2b. Would the company buy the equipment if its required rate of return is 16%?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Cost Accounting

Authors: Edward J. Vanderbeck

14th Edition

0324374178, 978-0324374179

More Books

Students also viewed these Accounting questions

Question

Let A be the given matrix. Find A -1 without a calculator. 8

Answered: 1 week ago

Question

Discuss the roles of metacognition in learning and remembering.

Answered: 1 week ago

Question

6. List and explain important trends in compensation management.

Answered: 1 week ago

Question

What are our strategic aims?

Answered: 1 week ago