X Company currently buys 7,000 units of a part each year from a supplier for $8.10 per part, but it is considering making the part instead. It paid a consulting firm $15,000 to do the make/buy analysis. The consulting firm determined that X Company would have to buy equipment costing $150,000 to make the part. The equipment would last for six years, at which time it would have zero disposal value. The consulting company also estimated that it would cost X Company $28,085 a year to produce the 7,000 units. What is the approximate rate of return if X Company makes the part instead of buying it from the supplier? [Note: Submit 1% as .01, etc.]

Answer rating: 100% (QA)

Annual cost of buying 7000 810 56700 Annual cost ... View the full answer