A piece of labor-saving equipment has just come onto the market that Mitsui Electronics, Limited, could use to reduce costs in one ofits plants in Japan. Relevant data relating to the equipment follow:Purchase cost of the equipmentAnnual cost savings that will beprovided by the equipmentLife of the equipmentRequired:1a. Compute the payback period for the equipment.1b. If the company requires a payback period of four years or less, would the equipment be purchased?2a. Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment's useful life.2b. Would the equipment be purchased if the company's required rate of return is 16%?Complete this question by entering your answers in the tabs below.Req 1AReq 1B$ 378,000$ 70,00012 yearsReq 2AYearsReq 2BCompute the payback period for the equipment. (Round your answer to 1 decimal place.)Payback Period< Req 1AReq 1B >

Payback Period= Purchase Cost / Annual Cost SavingsNet income = Annual Cost Savings -…

Answered: A piece of labor-saving equipment has…

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 5MAD: Home Garden Inc. is considering the construction of a distribution warehouse in West Virginia to...

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A piece of labor-saving equipment has just come onto the market that Mitsui Electronics, Limited, could use to reduce costs in one of its plants in Japan. Relevant data relating to the equipment follow: Purchase cost of the equipment Annual cost savings that will be provided by the equipment Life of the equipment $ 600,000 $ 100,000 12 years Required: 1a. Compute the payback period for the equipment. 1b. If the company requires a payback period of four years or less, would the equipment be purchased? 2a. Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment's useful life. 2b. Would the equipment be purchased if the company's required rate of return is 12%? Complete this question by entering your answers in the tabs below. ces Reg 1A Reg 18 Req 2A Req 28 Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment's useful life. (Round your answer to 1 decimal place i.e. 0.123 should be…
A piece of labor-saving equipment has just come onto the market that Mitsui Electronics, Ltd., could use to reduce costs in one of its plants in Japan. Relevant data relating to the equipment follow: Purchase cost of the equipment $ 560,500 Annual cost savings that will beprovided by the equipment $ 95,000 Life of the equipment 10 years Required: 1a. Compute the payback period for the equipment. 1b. If the company requires a payback period of four years or less, would the equipment be purchased? 2a. Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment’s useful life. 2b. Would the equipment be purchased if the company’s required rate of return is 16%?
A piece of laborsaving equipment has just come onto the market that Mitsui Electronics, Ltd., could useto reduce costs in one of its plants in Japan. Relevant data relating to the equipment follow (currency is inthousands of yen, denoted by ¥):Purchase cost of the equipment ............. ¥432,000Annual cost savings that will beprovided by the equipment .................. ¥90,000Life of the equipment .............................. 12 yearsRequired:(Ignore income taxes.)1. Compute the payback period for the equipment. If the company requires a payback period of fouryears or less, would the equipment be purchased?2. Compute the simple rate of return on the equipment. Use straight-line depreciation based on theequipment’s useful life. Would the equipment be purchased if the company’s required rate of returnis 14%?
A piece of labour-saving equipment has just come onto the market, which Kaisen Electronics Ltd. could use to reduce costs in one of its plants in Japan. Relevant data relating to the equipment follow (currency is in thousands of yen, denoted by ¥): Purchase cost of the equipment ¥ 283,500 Annual cost savings that will be provided by the equipment ¥ 63,000 Life of the equipment 10 years Required: 1-a. Compute the payback period for the equipment. (Round your answer to 1 decimal place.) 1-b. If the company requires a payback period of five years or less, would the equipment be purchased? multiple choice 1 No Yes 2-a. Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment’s useful life. (Round your answer to 1 decimal place. (i.e., 0.123 should be considered as 12.3%).) 2-b. Will the equipment be purchased if the company requires a rate of return of at least 17%?
Parker Hannifin of Cleveland, Ohio manufactures CNG fuel dispensers. It needs replacement equipment to streamline one of its production lines for a new contract, but plans to sell the equipment at or before its expected life is reached at an estimated market value for used equipment. Select between the two options using the corporate MARR of 15% per year and a future worth analysis for the expected use period. Also, write the FV spreadsheet functions that will display the correct future worth values. Option D E First cost, $ −62,000 −77,000 AOC, $ per year −15,000 −21,000 Expected market value, $ 8,000 10,000 Expected use, years 3 6
Hudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?
Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here.
Home Garden Inc. is considering the construction of a distribution warehouse in West Virginia to service its east coast stores based on the following estimates: a. Determine the net present value of building the warehouse, assuming a construction cost of 20,000,000, an annual net cost savings of 4,000,000, and a desired rate of return of 14%. Use the present value tables provided in Appendix A. b. Determine the net present value of building the warehouse, assuming a construction cost of 25,000,000, an annual net cost savings of 2,500,000, and a desired rate of return of 14%. Use the present value tables provided in Appendix A. c. Interpret the results of parts (a) and (b).
The Fence Company is setting up a new production line to produce top rails. The relevant data for two alternatives are shown below. Solve, a. Based on MARR of 8%, determine the annual rate of production for which the alternatives are equally economical. b. If it is estimated that production will be 300 top rails per year, which alternative is preferred and what will be the total annual cost?
A company received from a dealer who wishes to offer a new generator to power theirindustrial hoist for the replacement of their existing unit. The company wants to know how much they could afford to pay for another unit for the same purpose if the money is worth 10%. Data as follows: Given:Required:Solution:
solve a and b based on data in the images provided. a.What are the minimum and maximum transfer prices for the 12,300 batteries needed in the next 6 months that would be acceptable to the Battery and the Auto Divisions? Why are these the minimum and maximum prices? b.What is the projected total operating income for AMP Industries for the next six months if the internal transfer of the 12,300 batteries takes place at $11,280 per unit? What is AMP Industries’ projected total operating income if the internal transfer does not take place? Assume there is no external market for the batteries produced by the Battery Division.
Flanders Manufacturing is considering purchasing a new machine that will reduce variable costs per part produced by $0.15. The machine will increase fixed costs by $18,250 per year. The information they will use to consider these changes is shown here. The following names are to be used when completing this problem: Operating Income Variable Costs Sales Fixed Costs per Unit Selling Price per Unit Variable Cost per Unit Contribution Margin Fixed Costs Operating Loss If Flanders purchases the new machinery, what will be the company’s break-even point in units? . Use commas as needed (i.e. 1,234). If Flanders purchases the new machinery, what will be the company’s break-even point in dollars? . Rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). Assuming Flanders purchases the new machinery, construct a contribution margin income statement for sale of 216,000 units. Rounded to whole dollars and shown with "$" and commas as needed (i.e.…

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