A make or buy decision is being considered for a part that has been purchased from suppliers in the past The savings are estimated to be $15,000 per year The equipment to produce the part would cost $55,000 and have a life of seven years and no salvage value at that time The organization wants to earn 10 after tax on its investments Determine the operating cash flow of the investment and if it meets the desired after tax ROI if straight line depreciation is used and the effective tax rate is 50

Question: A make or buy decision is being considered for a part that has been purchased from suppliers in the past. The savings are estimated to

A make or buy decision is being considered for a part that has been purchased from suppliers in the past. The savings are estimated to be $15,000 per year. The equipment to produce the part would cost $55,000 and have a life of seven years and no at that time. The organization wants to earn 10% after tax on its investments. Determine the operating cash flow of the investment and if it meets the desired after-tax ROI if straight-line depreciation is used and the effective tax rate is 50%.

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