A piece of labor-saving equipment has just come onto the market that Mitsul Electronics, Limited, could use to reduce costs in one of its plants in Japan. Relevant data relating to the equipment follow: $ 600,000 Purchase cost of the equipnent Annual cost savings that will be provided by the equipment Life of the equipment $ 100,000 12 years 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 12%? Complete this question by entering your answers in the tahu balom

A piece of labor-saving equipment has just come onto the market that Mitsul Electronics, Limited, could use to reduce costs in one of its plants in Japan. Relevant data relating to the equipment follow: $ 600,000 Purchase cost of the equipnent Annual cost savings that will be provided by the equipment Life of the equipment $ 100,000 12 years 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 12%? Complete this question by entering your answers in the tahu balom

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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