Question: A salad oil bottling plant can either purchase caps for the glass bottles at 5 cents each or install $500,000 worth of plastic molding equipment

A salad oil bottling plant can either purchase caps for the glass bottles at 5 cents each or install $500,000 worth of plastic molding equipment and manufacture the caps at the plant. The manufacturing engineer estimates the material, labor, and other costs would be 3 cents per cap.

(a) If 12 million caps per year are needed and the molding equipment is installed, what is the payback period?

(b) The plastic molding equipment would be depreciated by straight-line depreciation using a 5-year useful life and no salvage value. Assuming a 40% income tax rate, what is the after-tax payback period, and what is the after-tax rate of return?

Step by Step Solution

★★★★★

3.36 Rating (183 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a Payback 50000012000000 x 005 003 208 years b AfterTax Payback SOYD 15 Yea... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

7-B-E-M (366).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

A plastic injection molding plant will be built to produce 6 million molded parts per year. The plant will run three 8hour shifts per day, five days per week, 50 weeks per year. For planning...

Labor and material costs for manufacturing two guitar models are (A) If a total of $3,000 a week is allowed for labor and material, how many of each model should be produced each week to use exactly...

A VMT tax of 4.4 cents per mile would internalize the external cost from collisions on average, but the external cost varies with the age of the driver. As shown in Table, the external cost of young...

A salad oil bottling plant can either buy caps for the glass bottles at 5 cents each, or install $700,000 worth of plastic moulding equipment and manufacture the caps at the plant. The manufacturing...

Problem 2 A salad oil bottling plant can either buy caps for the glass bottles at 6 cents each, or install $ 7 0 0 , 0 0 0 worth of plastic moulding equipment and manufacture the caps at the plant....

7. Based on Problem 12-24 A salad oil bottling plant can either buy caps for the glass bottles at 6 cents each, or install $1,000,000 worth of plastic moulding equipment and manufacture the caps at...

A salad oil bottling plant can either buy caps for the glass bottles at $0.05 each or install $500,000 worth of plastic molding equipment and manafacture the caps at the plant. The manufacturing...

ht-Line Depreciation A salad oil bottling plant can either buy caps for the glass bottles at 5e each or install $500, 000 worth of plastic molding equipment and manufac- ture the caps at the plant....

A bottling plant can either buy caps for the glass bottles at 5 cents each or install $500,000 worth of plastic molding equipment and manufacture the caps at the plant. The manufacturing engineer...

PLEASE answer it as a Report style-Not Essay, and please answer as many details as possible. ( each question, I need close to a full page TT) 4. Key success factors. Please identify the relevant...

What is a convertible bond? How does a bonds convertibility feature affect its return?

Trenny has asked her assistant to prepare estimates of cost of two different sizes of power plants. The assistant reports that the cost of the 80 MW plant is $190,000,000, while the cost of the 260...

In the context of SERVQUAL, _ _ _ _ _ is the knowledge and courtesy of service providers and their ability to convey trust and confidence. Group of answer choices responsiveness reliability competence

4. The input is the force f and the outputs are the displacements z1 and z2. (assume z2>z3) m2 'f Z2

3. a) For the system shown, maximum percent overshoot is 4,5 % and peak time is 1,0997 s. Determine "natural frequency", "damping degree", "M", "K", and "rise time". b) For the system shown,...

Hospitality Discuss the Meeting Planning process and propose how you could organize a mismanaged meeting into a successful one. (20)

The active values of a sinusoidal resource is 200V . And this resource is parallel with two coils . Theese coils are feeding from this resource. When we are measure with an ampere meter to this two...

6. A windmill with a rotor diameter of 50 m converts the wind energy into electrical energy with an efficiency of 25%. The cut-in and cut-out speed are 10 km / h and 90 km / h, respectively. What is...

BE11.12 (LO 5) Indicate whether the following items are capitalized or expensed in the current year. a. Purchase cost of a patent from a competitor. b. Research costs. c. Development costs (after...

A factory releases air pollutants that have a negative impact on the adjacent neighborhood (populated by 2,000 households). If the government could assign property rights to the air to either the...

Compare a pollution reduction program that permits a certain level of pollution using emissions standards with one that permits the same level of pollution using tradable emissions permits.

Evaluate the following toll charges for a stretch of highway frequented by commuters: a $2 toll between 7 a.m. and 10 a.m. and between 3 p.m. and 6 p.m., and a $4 toll at all other times of the day....

Evaluate the following statement: Public health is at stake when drinking water is contaminated by pollution. Local governments should take all measures necessary to ensure that zero pollutants...

Evaluate the following statement: If people do not use paper or if they recycle paper, there is less incentive for lumber companies to plant trees on private land.

age 3 of 3 2 3 Question 11 (0.2 points) Which one of the following is an example of systematic risk? 1) Major layoff by a regional manufacturer of power boats ge 2: 2) Surprise firing of a firm's...