Brady Service Center just purchased an automobile hoist for $32,220. The hoist h

Question

Brady Service Center just purchased an automobile hoist for $32,220. The hoist has an 8-year life and an estimated salvage value of $3,330. Installation costs and freight charges were $3,840 and $800, 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 7 extra mufflers per week. Each muffler sells for $74 installed. The cost of a muffler is $38, and the labor cost to install a muffler is $13.

Link to Text Link to Text Brady Service Center just purchased an automobile hoist for $32,220. The hoist has an 8-year life and an estimated salvage value of $3,330. Installation costs and freight charges were $3,840 and $800, 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 7 extra mufflers per week. Each muffler sells for $74 installed. The cost of a muffler is $38, and the labor cost to install a muffler is $13. Link to Text Link to Text Link to Text Link to Text Link to Text Link to Text Brady Service Center just purchased an automobile hoist for $32,220. The hoist has an 8-year life and an estimated salvage value of $3,330. Installation costs and freight charges were $3,840 and $800, 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 7 extra mufflers per week. Each muffler sells for $74 installed. The cost of a muffler is $38, and the labor cost to install a muffler is $13.

Link to Text Link to Text Brady Service Center just purchased an automobile hoist for $32,220. The hoist has an 8-year life and an estimated salvage value of $3,330. Installation costs and freight charges were $3,840 and $800, 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 7 extra mufflers per week. Each muffler sells for $74 installed. The cost of a muffler is $38, and the labor cost to install a muffler is $13. Compute the cash payback period for the new hoist. (Round answer to 2 decimal places, e.g. 10.50.)

Explanation / Answer

COST OF THE AUTOMOBILE HOIST = purchase cost +installation cost + freight charges

32220+3840+800

=$36860

DEPRECIATION PER YEAR = (36860-3330)/8 = 4195

CASH FLOW PER WEEK =7*[74-(38+13)] = $161 PER WEEK

PAY BACK PERIOD IN WEEKS = 36860/161 =228.94 WEEKS

i.e. =228.94/52 =4.40 years..

COST OF THE AUTOMOBILE HOIST = purchase cost +installation cost + freight charges

32220+3840+800

=$36860

DEPRECIATION PER YEAR = (36860-3330)/8 = 4195

CASH FLOW PER WEEK =7*[74-(38+13)] = $161 PER WEEK

PAY BACK PERIOD IN WEEKS = 36860/161 =228.94 WEEKS

i.e. =228.94/52 =4.40 years..

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