Exercise 24-9 Legend Service Center just purchased an automobile hoist for $34,100. The hoist has an 8-year life and an estimated salvage value of $3,900. Installation costs and freight charges were $4,060 and $800, 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 7 extra mufflers per week. Each muffler sells for $73 installed. The cost of a muffler is $39, and the labor cost to install a muffler is $16. (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 %
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Exercise 24-9 Legend Service Center just purchased an automobile hoist for $34,100. The hoist has an 8-year life and an estimated salvage value of…
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