The purchase of printing equipment could increase the expenses for the company hence the owner of the small printing company can explore other options. The options will aim at increasing printing and sales in the company. A viable option is increasing the printing hours in a day. More time will allow the company to increase its production hence more output for sale and profits of up to %100,000 and a minimum of $70,000. Also, the owner can employ more workers who are highly skilled. The workers will increase the volume of work printed hence more sales. Professional workers can utilize their skills to improve the quality of material printed to the premium output. The owner can use the premium services to attract new customers who, in turn, increase the sales. The premium services will attract high prices hence more revenue to the company to profits up to $120,000 and low sales of $80,000.
Optimism is a feeling of high confidence and hopes that events will turn out in the best possible way. The owner of the printing company should not rely on her optimistic feelings as the printing company is affected by various factors other than purchasing the equipment (Ucbasaran, Westhead, Wright, & Flores, 2010). Also, the future is subjected to changes hence a lot of consideration is required.
Other than the owner’s optimism or pessimism, she should consider other factors and costs. These factors include electricity bills, availability of raw materials and skilled labor to operate the equipment, availability of spare parts of the equipment, maintenance cost, and technology advance (Sanatgar, Campagne, & Nierstrasz, 2017). The factors will enable the owner to make a more informed decision.
The printing equipment is subjected to depreciation over time due to usage and other associated factors (Li, W. & Hall, 2020). The depreciation of the equipment will reduce the company’s profit in the income statement for five years. The owners should consider the depreciation per year against profits. Five years is a short life span, which will limit the owners from fully utilizing the equipment and consecutively lead to losses. The owner should purchase equipment with a longer life span to fully utilize the equipment and generate higher margins.
References
Li, W. C., & Hall, B. H. (2020). Depreciation of business R&D capital. Review of Income and Wealth, 66(1), 161-180.
Sanatgar, R. H., Campagne, C., & Nierstrasz, V. (2017). Investigation of the adhesion properties of direct 3D printing of polymers and nanocomposites on textiles: Effect of FDM printing process parameters. Applied Surface Science, 403, 551-563.
Ucbasaran, D., Westhead, P., Wright, M., & Flores, M. (2010). The nature of entrepreneurial experience, business failure, and comparative optimism. Journal of business venturing, 25(6), 541-555.