Re-manufactured annually to make this profitable undertaking

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Reference no: EM131532526

Each year in the United States nearly 5.4 billion pounds of discarded carpet end up in land fills. In response to this situation, the carpet manufacturer has decided to start a take-back program whereby obsolete carpet is reclaimed at the end of its useful life (about 7 years). The remanufactured carpet will then be recycled into the company's supply chain. The out-of-pocket (variable) cost of recycling is $1.00 per square yard of carpet, and the remanufactured carpet can be sold for $2.50 per square yard. If the recycling equipment costs $0.8 million and has no market value at the end of its eighteight-year life, how much carpet must be remanufactured annually to make this a profitable undertaking The company's MARR is 13?% per year.

Reference no: EM131532526

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