Adams Manufacturing Company is considering purchasing a machine that could reduce labor costs in one...
90.2K
Verified Solution
Link Copied!
Question
Accounting
Adams Manufacturing Company is considering purchasing a machine that could reduce labor costs in one of its facililties in North Carolina. The relevant information for the machine follow:
| Purchase cost of the machine | $ | 640,500 |
| Annual cost savings that will be provided by the machine | $ | 105,000 |
| Life of the machine | 10 years | |
Required:
1a. Compute the payback period for the equipment.
1b. If the company requires a payback period of four years or less, would the machine be purchased?
2a. Compute the simple rate of return on the machine. Use straight-line depreciation based on the machines useful life.
2b. Would the machine be purchased if the companys required rate of return is 13%?
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.