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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%? Req 1A $ 522,000 $ 90,000 Complete this question by entering your answers in the tabs below. Req 1B Req 2A 10 years Years Req 2B Compute the payback period for the equipment. (Round your answer to 1 decimal place.) Payback Period < Req 1A Req 1B >

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%? Req 1A $ 522,000 $ 90,000 Complete this question by entering your answers in the tabs below. Req 1B Req 2A 10 years Years Req 2B Compute the payback period for the equipment. (Round your answer to 1 decimal place.) Payback Period < Req 1A Req 1B >

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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%? Req 1A Complete this question by entering your answers in the tabs below. Req 1B $ 522,000 $90,000 Req 2A Years 10 years Req 2B Compute the payback period for the equipment. (Round your answer to 1 decimal place.) Payback Period < Req 1A Req 1B >
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%? Req 1A Complete this question by entering your answers in the tabs below. Req 1B $ 522,000 $90,000 Req 2A Years 10 years Req 2B Compute the payback period for the equipment. (Round your answer to 1 decimal place.) Payback Period < Req 1A Req 1B >
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