Harmony Auto Group sells and services imported and domestic cars. The owner wants to evaluate the option of outsourcing all of its new auto warranty service work to Winslow, Inc., a private repair service that works on any make and year car. Either a 5-year contract basis or 10-year license agreement is available from Winslow. Revenue from the manufacturer will be shared with no added cost incurred by the car/warranty owner. Alternatively, Harmony can continue to do warranty work in-house for the foreseeable future. Use the estimates made by the Harmony owner to perform an annual worth evaluation at 10% per year to select the best option. Monetary values are in $ million units.

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In-house Contract License First cost, $ Annual cost, $ per year Annual revenue, $ per year |Life, years -20 -2 -0.2 1.3 -1 2.5 5 -4 10 8.