Legend Service Center just purchased an automobile hoist for $32,400. The hoist has an 8-year life andan estimated salvage value of $3,000. Installation costs and freight charges were $3,300 and $700,respectively. Legend uses straight-line depreciation.The new hoist will be used to replace mufflers and tires on automobiles. Legend estimates that the newhoist will enable its mechanics to replace 5 extra mufflers per week. Each muffler sells for $72 installed.The cost of a muffler is $36, and the labor cost to install a muffler is $16.Instructions1. Compute the cash payback period for the new hoist.2. Compute the annual rate of return.for the new hoist. (Round to one decimal.)

Payback Period = Net Cost of the Investment/Incremental Cash flow every year Annual Rate of Return =…

Answered: Instructions 1. Compute the cash…

Instructions 1. Compute the cash payback period for the new hoist. 2. Compute the annual rate of return.for the new hoist. (Round to one decimal.)

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 8PB: Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is...

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Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one it expects to use the truck for 26,000 miles. Calculate the annual depreciation expense.
St. Johns River Shipyards welding machine is 15 years old, fully depreciated, and has no salvage value. However, even though it is old, it is still functional as originally designed and can be used for quite a while longer. A new welder will cost 182,500 and have an estimated life of 8 years with no salvage value. The new welder will be much more efficient, however, and this enhanced efficiency will increase earnings before depreciation from 27,000 to 74,000 per year. The new machine will be depreciated over its 5-year MACRS recovery period, so the applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. The applicable corporate tax rate is 25%, and the project cost of capital is 12%. What is the NPV if the firm replaces the old welder with the new one?
Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one the company expects the truck to be driven for 26,000 miles; in year two, 30,000 miles; and in year three, 40,000 miles. Consider how the purchase of the truck will impact Montellos depreciation expense each year and what the trucks book value will be each year after depreciation expense is recorded.
Legend Service Center just purchased an automobile hoist for $36,800. The hoist has an 8-year life and an estimated salvage value of $3,800. Installation costs and freight charges were $4,100 and $700, 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 $72 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 years (b)Compute the annual rate of return for the new hoist. (Round answer to 2 decimal places, e.g. 10.52%.) Annual rate of return %
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A contractor has purchased a wheel loader for $115,000 and plans to use it 2,000 hours per year. The cost of one set of tires is $25,000. At this usage rate, the contractor anticipates disposing of the loader after using it for 10 years and realizing an salvage value of $35,000. The flywheel horsepower rating of the loader's diesel engine is 105 horsepower. The loader operator will earn $34.00 per hour including fringe benefits, and diesel fuel costs $1.20 per gallon. The interest rate is 10%. How much is the hourly equipment repair cost if annual cost of repairs equals 70% of straight line depreciation? Please don't answer in handwritten..thanku
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