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A company is planned to install new automated plastic molding press. Four different presse are available as follows: Press 1 Press 2 Press 3 Press 4 $30,000 $49,000 $52,000 5 5 5 Capital Investment $24,000 Useful Life (year) 5 Annual Expenses Power ($) 2,720 Labor ($) 26,400 Maintenance ($) 1,600 Tax & Insurance ($) 480 2,720 4,800 4,800 24,000 16,800 14,800 1,800 2,600 2,000 608 992 1,040 Assume that each press has the same output capacity (120,000 units per year) and all units can be sold (the selling price is $0.375 per unit. Additional capital invested is expected to earn at least 10%. Which press should be chosen?

A company is planned to install new automated plastic molding press. Four different presse are available as follows: Press 1 Press 2 Press 3 Press 4 $30,000 $49,000 $52,000 5 5 5 Capital Investment $24,000 Useful Life (year) 5 Annual Expenses Power ($) 2,720 Labor ($) 26,400 Maintenance ($) 1,600 Tax & Insurance ($) 480 2,720 4,800 4,800 24,000 16,800 14,800 1,800 2,600 2,000 608 992 1,040 Assume that each press has the same output capacity (120,000 units per year) and all units can be sold (the selling price is $0.375 per unit. Additional capital invested is expected to earn at least 10%. Which press should be chosen?

CONCEPTS IN FED.TAX.,2020-W/ACCESS
CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter9: Acquisitions Of Property
Section: Chapter Questions
Problem 45P
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A company is planned to install new automated plastic molding press. Four different presses are available as follows: Press 1 Press 2 Press 3 Press 4 Capital Investment $24,000 $30,000 $49,000 $52,000 Useful Life (year) 5 5 5 5 Annual Expenses Power ($) Labor ($) Maintenance ($) Tax & Insurance ($) 2,720 26,400 1,600 480 2,720 24,000 1,800 608 4,800 16,800 2,600 992 4,800 14,800 2,000 1,040 Assume that each press has the same output capacity (120,000 units per year) and all units can be sold (the selling price is $0.375 per unit. Additional capital invested is expected to earn at least 10%. Which press should be chosen?
Transcribed Image Text:A company is planned to install new automated plastic molding press. Four different presses are available as follows: Press 1 Press 2 Press 3 Press 4 Capital Investment $24,000 $30,000 $49,000 $52,000 Useful Life (year) 5 5 5 5 Annual Expenses Power ($) Labor ($) Maintenance ($) Tax & Insurance ($) 2,720 26,400 1,600 480 2,720 24,000 1,800 608 4,800 16,800 2,600 992 4,800 14,800 2,000 1,040 Assume that each press has the same output capacity (120,000 units per year) and all units can be sold (the selling price is $0.375 per unit. Additional capital invested is expected to earn at least 10%. Which press should be chosen?
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