FIN--5203-1D2-FA-2021 - Finance for Engineers Time left 1:29:00 Question 11 Not yet answered To Points out of 2.50 Fin P Flag question GENERAL INSTRUCTIONS: ENTER YOUR ANSWER AS A NUMBER WITHOUT A COMMA, ROUNDED TO THE WHOLE NUMBER, for instance if you compute 77,342.6478 units then ENTER 77343 AS YOUR ANSWER. DO NOT ROUND IN YOUR CALCULATION STEPS (use calculator memory functions) TO AVOID ROUNDING ERRORS. There is a little bit of tolerance built into accepting/rejecting your answer, but if you round in your intermediate calculations you may be too far off. Bikes-Are-Us, Inc. produces bicycles. One of the parts it needs to produce a bicycle is pedals. The pedals are currently purchased from an external supplier for $189 per unit. The company is considering to produce the pedals internally instead. To produce the pedals internally, it would need to acquire a machine for $49,000, which would be used for 8 years and then scrapped, with no salvage value. The annual operating and maintenance cost of the machine is $23,000. The internal production would also result in variable cost of $22 per unit produced. Assume the MARR is 12%. Calculate the annual number of units produced that would result in the company being indifferent between buying the pedals externally and producing them internally (In other words, calculate the annual breakeven quantity of units produced). (Hint: express the annual worth of cost of each alternative in terms of the number of units, equate, and solve for the number of units.) Answer: Previous page Next page TOSHIBA