Able Plastics, an injection-molding firm, hasnegotiated a
Chapter , Problem 9-42(choose chapter or problem)
Able Plastics, an injection-molding firm, hasnegotiated a contractwith a nationalchainof depart- ment stores. Plastic pencil boxes are to be producedfor a 2-year period. Able Plastics has never pro- duced the item before and requires all new dies. Ifthe firm invests $67,000 for special removal equip- ment to unload the completed pencil boxes fromthe molding machine, one machine operator can beeliminated. This would save $26,000 per year. Theremoval equipment has no salvage value and is notexpected to be used after the 2-year production con-tract is completed. The equipment,although uselessto Able, would be serviceable for about 15 years.What is the payback period? Should Able Plasticsbuy the removal equipment?
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