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The johnson company pays $2000 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 $60,000 hydraulic press baler and spend $30,000 a year for labour to operate the baler. The baler has an estimated useful of 30 years and no salvage value. Strapping material would be produced. A wastepaper company will pick up the bales at the plant and play and pay johnson $23 per bale for them. Use an annual cash flow analysis and interest rate of 8% to recommend whether it is economical to install and operate the baler.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91229918

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