Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company is considering buying a plastic injection mold tool and has two options: a two-cavity mold at $45,000 or a four-cavity mold at $80,000.

A company is considering buying a plastic injection mold tool and has two options: a two-cavity mold at $45,000 or a four-cavity mold at $80,000. It is expected that each mold will last 100,000 shots and will have to be replaced at no book value. The company is expected to sell 40,000 parts/year at $0.25 profit per piece. Use ROI analysis techniques to determine which mold the company should buy, assuming a tax rate of 33 percent straight-line depreciation for the life of the machine. Do not include a replacement for the two-cavity machine after five years. Use hand calculations (no software) for ROI determination.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introduction To The Financial Management Of Healthcare Organizations

Authors: Michael Nowicki

6th Edition

1567936695, 9781567936698

More Books

Students also viewed these Finance questions

Question

How would you describe Mark Zuckerberg as a team leader?

Answered: 1 week ago