Apiece of laborsaving 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 $ 484,500
annual cost savings that will be
provided by the equipment $ 85,000
life of the equipment 12 years

required:
1-a. compute the payback period for the equipment.

1-b.
if the company requires a payback period of four years or less, would the equipment be purchased?

yes
no

2-a.
compute the simple rate of return on the equipment. use straight-line depreciation based on the equipment’s useful life.

2-b. would the equipment be purchased if the company’s required rate of return is 14%?

Oakmont company has an opportunity to manufacture and sell a new product for a four-year period. the company’s discount rate is 18%. after careful study, oakmont estimated the following costs and revenues for the new product: cost of equipment needed $ 230,000 working capital needed $ 84,000 overhaul of the equipment in year two $ 9,000 salvage value of the equipment in four years $ 12,000 annual revenues and costs: sales revenues $ 400,000 variable expenses $ 195,000 fixed out-of-pocket operating costs $ 85,000 when the project concludes in four years the working capital will be released for investment elsewhere within the company. click here to view exhibit 12b-1 and exhibit 12b-2, to determine the appropriate discount factor(s) using tables.

Why does an organization prepare a balance sheet? a. to reveal what the organization owns and owes at a point in time b. to reveal how well the company utilizes its cash c. to calculate retained earnings for a given accounting period d. to calculate gross profit for a given accounting period

An outside supplier has offered to sell talbot similar wheels for $1.25 per wheel. if the wheels are purchased from the outside supplier, $15,000 of annual fixed overhead could be avoided and the facilities now being used could be rented to another company for $45,000 per year. direct labor is a variable cost. if talbot chooses to buy the wheel from the outside supplier, then annual net operating income would: