Mitsui Electronics, Limited, is considering buying a labor-saving pierce of equipment and provided the following data: Purchase cost of the equipment $ 484,500 Annual cost savings that will be provided by the equipment $ 85,000 Life of the equipment 12 years Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment’s useful life.

Mitsui Electronics, Limited, is considering buying a labor-saving pierce of equipment and provided the following data: Purchase cost of the equipment $ 484,500 Annual cost savings that will be provided by the equipment $ 85,000 Life of the equipment 12 years Compute the simple rate of return on the equipment. Use straight-line depreciation based on the equipment’s useful life.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 18E

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Purchase cost of the equipment	$ 484,500
Annual cost savings that will be provided by the equipment	$ 85,000
Life of the equipment	12	years

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