Chapter $25HW$

Question $4$ of $5-$ Cha

BMAppendixG.indd

calculator$-$Google

Home

Question $4$ of $5$

$\frac{0}{3}$

Legend Service Center just purchased an automobile hoist for $$34,400.$ The hoist has an $8-$year life and an estimated salvage value of $$3,400.$ Installation costs and freight charges were $$3,700$ and $$900,$ respectively. Legend uses straight$-$line depreciation.

The new hoist will be used to replace mufflers and tires on automobiles. Legend estimates that the new hoist will enable his mechanics to replace $5$ extra mufflers per week. Each muffler sells for $$76$ installed. The cost of a muffler is $$35,$ and the labor cost to install a muffler is $$16.$

$($a$)$

Compute the cash payback period for the new hoist.

Cash payback period

years

$($b$)$

Compute the annual rate of return for the new hoist. $($Round answer to $2$ decimal places, e$.$g$.10\mathrm{.}52\%.)$

Annual rate of return

$\%$