Mitsui Electronics, Limited, is considering buying a labor-saving pierce of equipment and provided the following data:...
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Mitsui Electronics, Limited, is considering buying a labor-saving pierce of equipment and provided the following data: Purchase cost of the equipment Annual cost savings that will be provided by the equipment Life of the equipment Required: $ 494,800 $ 95,000 10 years 1a. Compute the payback period for the equipment. 1b. If the company requires a payback period of four years or less, would it buy the equipment? 2a. Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment's useful life. 2b. Would the company buy the equipment if its required rate of return is 14%? Mitsui Electronics, Limited, is considering buying a labor-saving pierce of equipment and provided the following data: Purchase cost of the equipment Annual cost savings that will be provided by the equipment Life of the equipment Required: $ 494,800 $ 95,000 10 years 1a. Compute the payback period for the equipment. 1b. If the company requires a payback period of four years or less, would it buy the equipment? 2a. Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment's useful life. 2b. Would the company buy the equipment if its required rate of return is 14%?
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