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A plastic manufacturing company produces a product from polystyrene. Two mixing processes, batch and continuous are available with the following data for each process: Initial
A plastic manufacturing company produces a product from polystyrene. Two mixing processes, batch and continuous are available with the following data for each process: Initial cost Maintenance cost/year Salvage value Life time Capacity (units/year) Batch * 50,000.00 10,000.00 6,000.00 5 years Depreciation, D1 * 1,000,000.00 50,000 - 60,000 5 8,800.00 Continuous * 100,000.00 # 36,000.00 * 12,000.00 5 years * 2,000,000.00 100,000 - 12,000 5 * 17,600.00 The company uses straight-line depreciation, pays 48% of its net income as income tax, and has an after-tax minimum attractive rate of return of 15%. The company has an infinite market and can sell all of the products it produces at #0.50 per unit. What is the figure for the best investment
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