A firm isconsidering purchasing $22500 of hand tools for use on a productionline

Question

A firm isconsidering purchasing $22500 of hand tools for use on a productionline. It is estimated that the tools will reduce overtime work by$2300 the first year, with this amount increasing $1100 per yearthereafter. Determine the payback period for the hand tools.(years) Please show all work so I understand how to do theproblem A firm isconsidering purchasing $22500 of hand tools for use on a productionline. It is estimated that the tools will reduce overtime work by$2300 the first year, with this amount increasing $1100 per yearthereafter. Determine the payback period for the hand tools.(years) Please show all work so I understand how to do theproblem Please show all work so I understand how to do theproblem

Explanation / Answer

The tools will pay themselfs off when money saved=moneyspent Money saved 1st year 2300 Money saved 2nd year (2300+1100) + (money savedbefore)=5700 Money saved 3rd year (3400+1100) + (money savedbefore)=10200 Money saved 4th year (4500+1100) + (money saved before)=15800 Money saved 5th year (5600+1100) + (money savedbefore)= 25500 So tools will pay them selves off at the end of 5years

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