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A company makes two million parts per year of a product. The company pays $0.10 per part as a royalty or can circumvent the royalty
A company makes two million parts per year of a product. The company pays $0.10 per part as a royalty or can circumvent the royalty by investing $300,000 and incurring a cost of $0.05 per part. Money is worth 10% per year and 8 years of operation are expected. Based on UNACOST, which alternative is better? Sketch a cash flow diagram for each case.
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