My company is currently buying an item for $54. We can make the same item internally for
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My company is currently buying an item for $54. We can make the same item internally for a labor cost of $17 a material cost of $11 and a tooling cost of $3 per part. However I need to purchase a machine to do the job. The machine will cost $550,000 and will require annual maintenance of 135,000. The machine will have a salvage value of 135,000 in seven years – At 6% interest what is the break even point?
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