6-30 The Johnson Company pays $1700 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 $48,000 hydraulic press baler and spend $21,000 per year for labor to operate the baler. The baler has an estimated useful life of 15 years and no salvage value. Strapping the material would cost $1500 per year for the estimated 600 bales a year that would be produced. A wastepaper company will pick up the bales at the plant and pay Johnson $27 per bale for them. Use an annual cash flow analysis and an interest rate of 8 % to recommend whether it is economical to install and operate the baler.
6-30 The Johnson Company pays $1700 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 $48,000 hydraulic press baler and spend $21,000 per year for labor to operate the baler. The baler has an estimated useful life of 15 years and no salvage value. Strapping the material would cost $1500 per year for the estimated 600 bales a year that would be produced. A wastepaper company will pick up the bales at the plant and pay Johnson $27 per bale for them. Use an annual cash flow analysis and an interest rate of 8 % to recommend whether it is economical to install and operate the baler.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:6-30
The Johnson Company pays $1700 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
$48,000 hydraulic press baler and spend $21,000 per year
for labor to operate the baler. The baler has an estimated
useful life of 15 years and no salvage value. Strapping the
material would cost $1500 per year for the estimated 600
bales a year that would be produced. A wastepaper
company will pick up the bales at the plant and pay
Johnson $27 per bale for them. Use an annual cash flow
analysis and an interest rate of 8 % to recommend
whether it is economical to install and operate the baler.
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