Hooverville Service Center just purchased an automobile hoist for $16900. The hoist has a 5-year life and an estimated salvage value of $1250. Installation costs were $3770 and freight charges were $960. Hooverville uses straight-line depreciation.
The new hoist will be used to replace mufflers and tires on automobiles. Hooverville estimates that the new hoist will enable his mechanics to replace four extra mufflers per week. Each muffler sells for $84.50 installed. The cost of a muffler is $46.50 and the labor cost to install a muffler is $13.
Instructions
(a) Compute the payback period for the new hoist.
(b) Compute the annual rate of return for the new hoist. (Round to one decimal.)

Question

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The Answer of Hooverville Service Center just purchased an automobile hoist for $16900. The hoist has a 5-year life and an estimated salvage value of $1250. Installation costs were $3770 and freight charges were $960. Hooverville uses straight-line depreciation.
The new hoist will be used to replace mufflers and tires on automobiles. Hooverville estimates that the new hoist will enable his mechanics to replace four extra mufflers per week. Each muffler sells for $84.50 installed. The cost of a muffler is $46.50 and the labor cost to install a muffler is $13.
Instructions
(a) Compute the payback period for the new hoist.
(b) Compute the annual rate of return for the new hoist. (Round to one decimal.)

Hooverville Service Center Just Purchased an Automobile Hoist for $16900