Football Comm LLC is a manufacturer of devices for football coaches and their coaching staffs that enable them to quickly and effectively communicate with one another during a game through a wireless sideline headset system. Currently, the company purchases all of the headsets included in their systems from a China-based supplier, but they have experienced a significant decrease in overall headset quality. To correct the problem, the company is considering producing their own headsets in-house. The company estimates that the transition will take place over 12 months. The system is expected to have an eight-year service life and produce savings and expenditures given in Table P5.13.
If the firm's MARR is 15%, use the NPW method to calculate the economic worth of producing the headsets in house.

Transcribed Image Text:

In-House Headset Manufacturing Investment Now (building) $500,000 First year (equipment and $2.200.000 facilities) Annual savings in materials and quality inspection Incremental annual expenses Incremental annual income taxes Economic service life Net salvage value $5,000,000 $1,500,000 $800,000 8 years S1.500,000