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Legend Service Center just purchased an automobile hoist for $32,900. The hoist has an 8-year life and an estimated salvage value of $3,640.
Legend Service Center just purchased an automobile hoist for $32,900. The hoist has an 8-year life and an estimated salvage value of $3,640. Installation costs and freight charges were $4,140 and $830, 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 6 extra mufflers per week. Each muffler sells for $73 installed. The cost of a muffler is $38, and the labor cost to install a muffler is $12.
(a)
Compute the cash payback period for the new hoist.(Round answer to 2 decimal places, e.g. 10.50.)
Cash payback period
years
(b)
Compute the annual rate of return for the new hoist.(Round answer to 1 decimal place, e.g. 10.5.)
Annual rate of return
%
