Pharoah Service Center just purchased an automobile hoist for $32,000. The hoist has an 8...
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Pharoah Service Center just purchased an automobile hoist for $32,000. The hoist has an 8 -year life and an estimated salvage value of $3,600. Installation costs and freight charges were $3,600 and $800, respectively. Pharoah uses straight-line depreciation. The new hoist will be used to replace mufflers and tires on automobiles. Pharoah estimates that the new hoist will enable its mechanics to replace 5 extra mufflers per week. Each muffler sells for $72 installed. The cost of a muffler is $39, and the labor cost to install a muffer is $13. (a) Compute the cash payback period for the new hoist. Cashpayback period years (b) Compute the annual rate of return for the new hoist. (Round answer to 2 decimal places, eg. 10.52\%) Annual rate of return TABLE 4 Present Value of an Annuity of 1 (n) TABLE 3 Present Value of 1 TABLE 4 Present Value of an Annuity of 1 TABLE 2 Future Value of an Annuity of 1 TABLE 1 Future Value of 1
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