Werribee Service Center just purchased an automobile hoist for 32,400. The hoist has an 8-year life and

Question:

Werribee Service Center just purchased an automobile hoist for €32,400. The hoist has an 8-year life and an estimated residual value of €3,000. Installation costs and freight charges were €3,300 and €700, respectively. Werribee uses straight-line depreciation.

The new hoist will be used to replace mufflers and tires on automobiles. Werribee estimates that the new hoist will enable his mechanics to replace five extra mufflers per week. Each muffler sells for €72 installed. The cost of a muffl er is €36, and the labor cost to install a muffler is €16.

Instructions

a. Compute the cash payback period for the new hoist.

b. Compute the annual rate of return for the new hoist. (Round to one decimal.)

Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...

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a Cost of hoist 32400 3300 700 36400 Net annual cash flows Number of extra mufflers5 X 52 weeks ...View the full answer

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Related Book For answer-question

Accounting Principles

ISBN: 978-1119419617

IFRS global edition

Authors: Paul D Kimmel, Donald E Kieso Jerry J Weygandt

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Question Posted: Jul 26, 2019 10:09 AM

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Werribee Service Center just purchased an automobile hoist for 32,400. The hoist has an 8-year life and

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a Cost of hoist 32400 3300 700 36400 Net annual cash flows Number of extra mufflers5 X 52 weeks ...View the full answer

Accounting Principles

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