Legend service center just purchased an automobile hoist, Ask an Expert

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Legend Service Center just purchased an automobile hoist for $33,600. The hoist has an 8-year life and an estimated salvage value of $3,290. Installation costs and freight charges were $4,220 and $780, 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 $38, and the labor cost to install a muffler is $14.

(a) Compute the cash payback period for the new hoist

Cash payback period

Entry field with correct answer

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

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92768893

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