Alameda Service center just purchased an automobile hoist for $ 14000. The hoist has a 6 year lifeand an estimated salvage value of $1481. Installation costs were $3020, and freight charges were $830 Alameda uses straight-line depreciation.
The new hoist will be used to replace mufflers and tires on automobiles. Alameda estimates that the new hoist will enable his mechanics to replace 5 extra mufflers per week. each muffler sells for $83 instaleed. The cost of a muffler is $23 and the labor to install a muffler is $14
(a) compute the payback period for the new hoist.
B) compute the annual rate of return for the new hoist.