I have having trouble with this problem. Can anyone help me? I have included the
ID: 2467716 • Letter: I
Question
I have having trouble with this problem. Can anyone help me? I have included the reference tables that we are required to use. FYI, I am using the textbook: Kimmel, Accounting: Tools for Decision Making, 5e. This is problem from Chapter 24 Planning Capital Investments. It is Exercise 24-9A.
Exercise 24-9 (part level submission) Brady Service Center just purchased an automobile hoist for $31,190. The hoist has an 8-year life and an estimated salvage value of $3,940. Installation costs and freight charges were $3,631 and $700, respectively. Brady uses straight-line depreciation. The new hoist will be used to replace mufflers and tires on automobiles. Brady estimates that the new hoist will enable his mechanics to is $12. replace 6 extra mufflers per week. Each muffler sells for $72 installed. The cost of a muffler is $41, and the labor cost to install a muffler (a) Compute the cash payback period for the new hoist. (Round answer to 2 decimal places, e.g. 10.50.) Collapse question part Cash payback period yearsExplanation / Answer
Purchase Price 31,190.00 Installation costs 3,631.00 Freight Charges 700.00 Total Initial Investment 35,521.00 Sale Price of Mufler 72.00 Cost of Mufler 41.00 Labour Cost 12.00 Net income per Mufler 19.00 No of Mufler per week 6.00 Extra Income per week = 19*6 114.00 Eaxtra income per year = 114*52 Weeks 5,928.00 PBP Time Amount Cumulative - (35,521.00) (35,521.00) 1.00 5,928.00 (29,593.00) 2.00 5,928.00 (23,665.00) 3.00 5,928.00 (17,737.00) 4.00 5,928.00 (11,809.00) 5.00 5,928.00 (5,881.00) 6.00 5,928.00 47.00 7.00 5,928.00 5,975.00 8.00 5,928.00 11,903.00 PBP= 5 + 5,881/5,928 PBP= 5.99 Years