Harmony Auto Group sells and services imported and domestic cars. The owner is considering the outsourcing of all its newcarwarranty servicework toWinslow, Inc., a private repair service that works on any make and year car. Both a 5-year contract basis or 10-year license agreement are available fromWinslow. Revenue from the manufacturer will be shared with no added cost incurred by the car/warranty owner. Alternatively, Harmony can continue to do warranty work in-house. Use the estimates made by the Harmony owner to perform an annualworth evaluation at 10% per year to select the best option. All dollar values are in millions.

Contract License In-house First cost, $ 0 2 20 Annual cost, $ per year 1 0.2 4 Annual income,