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In: AccountingA piece of laborsaving equipment has just come onto the marketthat Mitsui Electronics, Ltd., could...A piece of laborsaving equipment has just come onto the marketthat Mitsui Electronics, Ltd., could use to reduce costs in one ofits plants in Japan. Relevant data relating to the equipmentfollow: Purchase cost of the equipment$530,000 Annual cost savings that will be provided by the equipment$100,000 Life of the equipment10 years Required:1-a.Compute the payback period for the equipment.Payback PeriodChoose Numerator:/Choose Denominator:=Payback PeriodAnnual net cash outflow/Investment required=Payback period$30,000/$50,000=0.6years1-b.If the company requires a payback period of four years or less,would the equipment be purchased?YesNoSimple Rate of ReturnChoose Numerator:/Choose Denominator:=Simple Rate of ReturnAnnual incremental net operatingincome/Initial investment=Simple rate of return$320,000/$56,000=571.4%2-b.Would the equipment be purchased if the company’s required rateof return is 15%?YesNo