Legend Service Center just purchased an automobile hoist for $37,200. The hoist has an 8-year life...

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Legend Service Center just purchased an automobile hoist for$37,200. The hoist has an 8-year life and an estimated salvagevalue of $3,400. Installation costs and freight charges were $2,600and $800, respectively. Legend uses straight-line depreciation. Thenew hoist will be used to replace mufflers and tires anautomobiles. Legend estimates that the new hoist will enable hismechanics to replace 5 extra mufflers per week. Each muffler sellsfor $72 installed. The cost of a muffler is $37, and the labor costto install a muffler is $15.
(a) Compute the cash payback period for the new hoist.Cash payback period = _ YEARS
(b) Compute the annual rate of returnfor the new hoist. (Round answer to 2 decimal places, e.g.10.529.)
Annual rate of return = __

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Cash payback period is calculated for evaluation of theinvestment proposalAnswer aComputing the cash payback period for the newhoistNote Since rate of tax is not provided depreciation isignored in calculation of Net cash flow after tax for the purposeof calculating cash payback See Answer

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