Question: this question A software provider buys blank Bluray DVDs at $550 per hundred and currently uses 2 million DVDs per year. The manager believes that

this question

this question A software provider buys blank Bluray DVDs at $550 per

A software provider buys blank Bluray DVDs at $550 per hundred and currently uses 2 million DVDs per year. The manager believes that it may be cheaper to make the DVDs rather than buy them. Direct production costs (labour, materials, fuel) are estimated at $2.50 per DVD. The equipment needed would cost $3 million. The equipment should last for 15 years, provided it is overhauled every 5 years at a cost of $250000 each time. The operation will require additional current assets of $400000. The company's required rate of return is 12 per cent. A. Evaluate the proposal (20 marks) B. If the manager is uncertain about the reliability of some of the cashow data, discuss What techniques could be adopted to address this uncertainty (10 marks)

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