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2. Able Plastics, an injection-molding firm, has negotiated a contract with a national chain of department stores. Plastic pencil boxes are to be produced for a 2-year period. If the firm invests $58,000 for special removal equipment to unload the completed pencil boxes from the molding machine, one machine operator can be eliminated saving $33,000 per year. The removal equipment has no salvage value and is not expected to be used after the 2-year production contract is completed. The equipment would be serviceable for about 15 years. a. What is the simple payback period? b. Would you recommend to Able Plastics? Should they buy the machine?

2. Able Plastics, an injection-molding firm, has negotiated a contract with a national chain of department stores. Plastic pencil boxes are to be produced for a 2-year period. If the firm invests $58,000 for special removal equipment to unload the completed pencil boxes from the molding machine, one machine operator can be eliminated saving $33,000 per year. The removal equipment has no salvage value and is not expected to be used after the 2-year production contract is completed. The equipment would be serviceable for about 15 years. a. What is the simple payback period? b. Would you recommend to Able Plastics? Should they buy the machine?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Engineering Econ HW7 Q2

2. Able Plastics, an injection-molding firm, has negotiated a contract with a national chain of department stores. Plastic pencil boxes are to be produced for a 2-year period. If the firm invests $58,000 for special removal equipment to unload the completed pencil boxes from the molding machine, one machine operator can be eliminated saving $33,000 per year. The removal equipment has no salvage value and is not expected to be used after the 2-year production contract is completed. The equipment would be serviceable for about 15 years. a. What is the simple payback period? b. Would you recommend to Able Plastics? Should they buy the machine?
Transcribed Image Text:2. Able Plastics, an injection-molding firm, has negotiated a contract with a national chain of department stores. Plastic pencil boxes are to be produced for a 2-year period. If the firm invests $58,000 for special removal equipment to unload the completed pencil boxes from the molding machine, one machine operator can be eliminated saving $33,000 per year. The removal equipment has no salvage value and is not expected to be used after the 2-year production contract is completed. The equipment would be serviceable for about 15 years. a. What is the simple payback period? b. Would you recommend to Able Plastics? Should they buy the machine?
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