Consider again the choice between outsourcing and in$-$house assembly of HomeNet discussed in Section $8\mathrm{.}3$ and analyzed in Table $8\mathrm{.}6,.$ Suppose, however, that the upfront cost to set up for in$-$house production is $$6\mathrm{.}1$ million rather than $$5$ million, and the cost per unit for in$-$house production is expected to be $$92$ rather than $$95.($Note: the in$-$house production will represent a decrease of $$613,000$ in net working capital $.)$

a$.$ Suppose the outside supplier decides to raise its price above $$\frac{110}{?}$ unit. At what cost per unit for the outsourced units would Cisco be indifferent between outsourcing and in$-$house assembly?

b$.$ Alternatively, suppose the cost for outsourcing remains $$\frac{110}{?}$ unit, but expected demand increases above $100,000$ units per year. At what level of annual sales, in terms of units sold, would Cisco be indifferent between these two options?

a$.$ Suppose the outside supplier decides to raise its price above $$\frac{110}{?}$ unit. At what cost per unit for the outsourced units would Cisco be indifferent between outsourcing and in$-$house assembly? and $$\frac{92}{?}$ unit assembly cost: $($Round to the nearest integer.$)$

Year $,0$

In$-$House Assembly

Units $(000)$

Cost$/$unit $($$$)$

EBIT $($$$000)$

Incnme Tax at $20\%($ $$0$ nn$)$

Unlevered Tax Net income$($$$000)$

increase in NWC$($$$000)$

Free Cash Flow$($$$000)$