The Johnson Company pays $200 a month to a trucker to haul wastepaper and cardboard to the

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The Johnson Company pays $200 a month to a trucker to haul wastepaper and cardboard to the city dump. The material could be recycled if the company were to buy a $6000 hydraulic press bailer and spend $3000 a year for labor to operate the bailer. The bailer has an estimated useful life of 30 years and no salvage value. Strapping material would cost $200 per year for the estimated 500 bales a year that would be produced A wastepaper company will pick up the bales at the plant and pay Johnson $2.30 per bale for them. USI an annual cash flow analysis in working this problem
(a) If interest is 8%, is it economical to install and operate the bailer?
(b) Would you recommend that the bailer be installed?
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
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Engineering Economic Analysis

ISBN: 9780195168075

9th Edition

Authors: Donald Newnan, Ted Eschanbach, Jerome Lavelle

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