A piece of labor-saving equipment has just come onto the market that Mitsui Electronics, Limited, could use to reduce costs in one of its plants in Japan. Relevant data relating to the equipment follow Purchase cost of the equipment Annual cost savings that will be provided by the equipment Life of the equipment Required: 1a. Compute the payback period for the equipment. to. If the company requires a payback period of four years or less, would the equipment be purchased? $ 270,000 $ 60,000 12 years 2a. Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment's useful life. 2b. Would the equipment be purchased if the company's required rate of return is 15%? Complete this question by entering your answers in the tabs below. Reg 1A Req 18 Req 28 Compute the payback period for the equipment. (Round your answer to 1 decimal place.) Payback Period Req ZA Years Meg A Req 18 >
A piece of labor-saving equipment has just come onto the market that Mitsui Electronics, Limited, could use to reduce costs in one of its plants in Japan. Relevant data relating to the equipment follow Purchase cost of the equipment Annual cost savings that will be provided by the equipment Life of the equipment Required: 1a. Compute the payback period for the equipment. to. If the company requires a payback period of four years or less, would the equipment be purchased? $ 270,000 $ 60,000 12 years 2a. Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment's useful life. 2b. Would the equipment be purchased if the company's required rate of return is 15%? Complete this question by entering your answers in the tabs below. Reg 1A Req 18 Req 28 Compute the payback period for the equipment. (Round your answer to 1 decimal place.) Payback Period Req ZA Years Meg A Req 18 >
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
A3
Transcribed Image Text:A piece of labor-saving equipment has just come onto the market that Mitsui Electronics, Limited, could use to reduce costs in one of
its plants in Japan. Relevant data relating to the equipment follow.
Purchase cost of the equipment
Annual cost savings that will be
provided by the equipment
Life of the equipment
Required:
1a. Compute the payback period for the equipment.
1b. If the company requires a payback period of four years or less, would the equipment be purchased?
2a. Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment's useful life.
2b. Would the equipment be purchased if the company's required rate of return is 15% ?
Reg 1A
Complete this question by entering your answers in the tabs below.
Req 18
$ 270,000
$ 60,000
Req ZA
Years
12 years
Reg 28
Compute the payback period for the equipment. (Round your answer to 1 decimal place.)
Payback Period
€ Medla
Req 18 >
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