Question
2. A car manufacturing company analyzes the possibility of manufacturing the gas cap of its cars. Currently, the company buys each cap for $ 8
2. A car manufacturing company analyzes the possibility of manufacturing the gas cap of its cars. Currently, the company buys each cap for $ 8 from a supplier. The manufacture of said cap would imply that the company bought a machinery whose cost would be $ 3,300,000 and a salvage value after 5 years of use would be $ 100,000. In addition, to operate and maintain this machinery, the company incurred annual fixed costs of $ 500,000 and variable costs of $ 5 / cap. If the company needs 500,000 caps a year and the applicable LaTrema is 15% per year, which decision would be more profitable for the company: continue to buy gas caps or manufacture them? Solve the problem using the TIR criteria.
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