(Ignore Income Taxes in This Problem

question 144

Essay

(Ignore income taxes in this problem. )Brewer Company is considering purchasing a machine that would cost $537,600 and have a useful life of 9 years.The machine would reduce cash operating costs by $82,708 per year.The machine would have a salvage value of $107,520 at the end of the project.
Required:
a.Compute the payback period for the machine.
b.Compute the simple rate of return for the machine.

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Definitions:

Assumptions

Beliefs or statements taken for granted without proof, often forming the basis for decision-making or reasoning.

Western Law

A legal system that originated in Europe and is characterized by the principles of Roman law, common law, and modern statutory law.

Warranty

A guarantee given to the purchaser of a product or service, promising repair or replacement if the product or service fails to meet specified criteria.

Express Warranty

A written guarantee provided by a seller to a buyer regarding the condition of the product and pledging to repair or replace it if necessary.