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Sun Coast Tours is considering purchasing a new boat for use in its tour business. Relevant information concerning the boat is as follows: (Ignore income
Sun Coast Tours is considering purchasing a new boat for use in its tour business. Relevant information concerning the boat is as follows: (Ignore income taxes.) Required: 1-a. Compute the payback period for the boat. (Round your answer to 1 decimal place.) 1-b. If the company rejects all proposals with a payback period of more than five years, will the boat be purchased? Yes No 2-a. Compute the simple rate of return on the boat. Use straight-line depreciation based on the boat's useful life, assuming $12,80 salvage value. (Round your answer to 1 decimal place.) 2-b. Will the boat be purchased if the company's required rate of return is 14% ? Yes No
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