Compute the annual rate of return for the new hoist

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Reference no: EM13122540

Q. Peyton Service Center just purchased an automobile hoist for $42,350. The hoist has an 8-year life and an estimated salvage value of $3,810. Installation costs and freight charges were $3,766 and $880, respectively. Peyton uses straight-line depreciation.
The new hoist will be used to replace mufflers and tires on automobiles. Peyton estimates that the new hoist will enable his mechanics to replace 6 extra mufflers per week. Each muffler sells for $80 installed. The cost of a muffler is $37, and the labor cost to install a muffler is $18.

Compute the cash payback period for the new hoist. (Round answer to 2 decimal places, e.g. 10.50.) years

Compute the annual rate of return for the new hoist. (Round answer to 1 decimal place, e.g. 10.5. Round all calculations to 0 decimals.)

Reference no: EM13122540

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