A make-buy decision must be made for a component in a new product. Expected usage is 5,000 units per year, for a study period of 5 years.

The component can be purchased from a supplier for $25 per unit, with delivery promised within a week.

Alternatively, the component can be made in-house and be readily available, at a cost of $5 per unit, if equipment costing $150,000 is purchased. Labor and other operating costs are estimated to be $35,000 per year. Salvage is estimated at 10% of the first cost.

The MARR is 12% per year. Neglect the element of availability.

What is the break-even quantity for deciding whether to make or buy this component?