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?