Lee Corporation purchased new equipment for $180,000 to replace some old equipment. The new equipment...
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Lee Corporation purchased new equipment for $180,000 to replace some old equipment. The new equipment has a 6 year life and an expected salvage value of $45,000. The old equipment will be sold immediately for its salvage value of $30,000. Annual cost savings from the new equipment are expected to be $35,000 per year. The payback period of the equipment is closest to:
| a. | 4.3 years | |
| b. | 5.1 years | |
| c. | 6.0 years | |
| d. | 3.9 years
|
Sharps, Inc. is considering the purchase of equipment that would cost $45,000, have a useful life of 3 years, no salvage value and would result in labor savings of $21,000 per year. The internal rate of return on the investment in the equipment is closest to
a.
20%
b.
19%
c.
17%
d.
18%
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