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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 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. 15. 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. Reg 1A Reg 18 Reg 2 Reg 28 Compute the payback period for the equipment. (Round your answer to 1 decimal place.) Paytick period years Reg18 > Reg 1A Reg 1B Reg 2A Reg 2B If the company requires a payback period of four years or less, would the equipment be purchased? Yes No Reg 1A Reg 1B Reg 2 Reg 2B 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 le 0.123 should be considered as 12.3%.) Simple rate of return % Reg 1A Reg 1B Reg 2A Leg 28 Would the equipment be purchased if the company's required rate of return is 12%? Yes No

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