Ole Sarge Inc. has asked you to investigate production options for a custom maroon

shift knob for their new line of golf carts. They anticipate demand of $500$ carts per year and plan to

make the model for six years. You$$ve obtained a quote from a vendor who can supply knobs for $$16\mathrm{.}50$

each a with a minimum quantity of $450$ per year. To make the knobs in house you$$ve determined an

injection molding machine is needed that costs $$8000$ and will be worth $$1000$ after six years. The unit

cost of production is made up of several categories identified in the table below. The company$$s MARR

is $10\%.$

Raw material $$6\mathrm{.}00$

Labor $$2\mathrm{.}00$

Other production cost $$4\mathrm{.}00$

Find the following:

$($a$)$ Draw the cash flow diagram for the make option

$($b$)$ Calculate Annualized Equivalent Cost at MARR for the make option

$($c$)$ Calculate the unit cost for the make option

$($d$)$ Should Ole Sarge make or buy $($and why$)?$