Straight-Line Depreciation A 12-12 A salad oil bottling plant can either buy caps for the glass bottles at 5 each or install $500,000 worth of plastic molding equipment and manufacture estimates the material, labor, and other costs would the caps at the plant. The manufacturing engineer be 3e 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 combined 40% income tax rate, what is the after-tax payback period, and what is the after-tax rate of return?

12-12 A salad oil bottling plant can either buy caps for A the glass bottles at 5c 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 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 combined 40% income tax rate, what is the after-tax payback period, and what is the after-tax rate of return