Problem $15\mathrm{.}050-$ Choose between buy and purchase decisions by calculating estimated cost for each decision using time$-$value of money

The Mechanical Components Division manager asks you to recommend a make$/$buy decision on a major automotive subassembly that is currently purchased externally for a total of $$3\mathrm{.}9$ million this year. This cost is expected to continue rising at a rate of $$300,000$ per year. Your manager asks that both direct and indirect costs be included when in$-$house manufacturing $($make alternative$)$ is evaluated. New equipment will cost $$3\mathrm{.}000$ million, have a salvage of $$0\mathrm{.}5$ million and a life of $6$ years. Estimates of materials, labor costs, and other direct costs are $$1\mathrm{.}600$ million, per year. Typical indirect rates, bases, and expected usage are shown. Perform the AW evaluation at MARR $=12\%$ per year over a $6-$year study period.

$\backslash$table$[[$Department$,$Basis,Rate,Expected Usage$],[x,$Direct labor cost,$$2\mathrm{.}550$ per dollar,$$450,000$