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Brady Service Center

Price: $1.99


Brady Service Center just purchased an automobile hoist for $35,000. The hoist
has an 8-year life and an estimated salvage value of $3,000. Installation costs and freight
charges were $3,300 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 replace five extra mufflers per week.
Each muffler sells for $72 installed. The cost of a muffler is $36, and the labor cost to
install a muffler is $12.

Instructions
(a) Compute the cash payback period for the new hoist.
(b) Compute the annual rate of return for the new hoist. (Round to one decimal.)

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