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Swaggerty Corporation Is Considering Purchasing a Machine That Would Cost

question 91

Essay

Swaggerty Corporation is considering purchasing a machine that would cost $462,000 and have a useful life of 7 years. The machine would reduce cash operating costs by $115,500 per year. The machine would have no salvage value.
Required:
a. Compute the payback period for the machine.
b. Compute the simple rate of return for the machine.


Definitions:

Service Department

A division within a company or an organization that is responsible for providing various support and services to either internal or external customers.

Upper Control Limit

In statistical quality control, the highest value on a control chart that signals when a process is still in control without indicating concern.

Customer Complaints

Feedback or grievances expressed by customers concerning a company's products or services.

Service Department

A sector of a business or organization dedicated to providing maintenance, repair, and customer support services.

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