uire a pollution permit for each tonne of pollution dumped into the river. The government will sell 40 pollution permits for $75 each. It costs Firm A $100 f ch tonne of pollution that it eliminates before it reaches the river, and it costs Firm B $50 for each tonne of pollution that it eliminates before it reaches the er. Between the cost of permits and the cost of eliminating pollution, the likely outcome is Firm A spends and Firm B spends cros a. $4000; $3500 cros

uire a pollution permit for each tonne of pollution dumped into the river. The government will sell 40 pollution permits for $75 each. It costs Firm A $100 f ch tonne of pollution that it eliminates before it reaches the river, and it costs Firm B $50 for each tonne of pollution that it eliminates before it reaches the er. Between the cost of permits and the cost of eliminating pollution, the likely outcome is Firm A spends and Firm B spends cros a. $4000; $3500 cros

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter7: Corporations: Reorganizations

Section: Chapter Questions

Problem 30P

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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 a year for labor to operate the baler. The baler has an estimated useful life of 15 years and no salvage value. Strapping 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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