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Question: A company is considering buying a plastic injection mold tool and has two options: a two-cavity mold at $45,000 or a four-cavity mold at $80,000. It is expected that each mold will last 100,000 shots and will have to be replaced at no book value. The company is expected to sell 40,000 parts/year at $0.25 profit per piece. Use ROI analysis techniques to determine which mold the company should buy, assuming a tax rate of 33 percent straight-line depreciation for the life of the machine. Do not include a replacement for the two-cavity machine after five years. Use hand calculations (no software) for ROI determination.

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