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Unit VIII question 12

Unit VIII question 12

Essentials Of Investments
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
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Unit VIII question 12

Blossom Service Center just purchased an automobile hoist for $36,900. The hoist has an 8-year life and an estimated salvage value of $3,000. Installation costs and freight charges were $3,900 and $800, respectively. Blossom uses straight-line depreciation. The new hoist will be used to replace mufflers and tires on automobiles. Blossom estimates that the new hoist will enable its mechanics to replace 5 extra mufflers perweek. Each muffler sells for $71 installed. The cost of a muffleris $39, and the labor cost to install a muffler is $12. (a) Compute the cash payback period for the new hoist. Cash payback period (b). Compute the annual rate of return for the new hoist. (Round answer to 2 decimal places, e.g. 10.52%.). Annual rate of return e Textbook and Media Sevefor Later Attempts: 0 of 3 used Submit Answer
Transcribed Image Text:Blossom Service Center just purchased an automobile hoist for $36,900. The hoist has an 8-year life and an estimated salvage value of $3,000. Installation costs and freight charges were $3,900 and $800, respectively. Blossom uses straight-line depreciation. The new hoist will be used to replace mufflers and tires on automobiles. Blossom estimates that the new hoist will enable its mechanics to replace 5 extra mufflers perweek. Each muffler sells for $71 installed. The cost of a muffleris $39, and the labor cost to install a muffler is $12. (a) Compute the cash payback period for the new hoist. Cash payback period (b). Compute the annual rate of return for the new hoist. (Round answer to 2 decimal places, e.g. 10.52%.). Annual rate of return e Textbook and Media Sevefor Later Attempts: 0 of 3 used Submit Answer
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