Question
FootballComm LLC is a manufacturer of devices for football coaches and their coaching staffs that enables them to quickly and effectively communicate with one another
FootballComm LLC is a manufacturer of devices for football coaches and their coaching staffs that enables them to quickly and effectively communicate with one another during a game through a wireless sideline headset system.? Currently, the company purchases all of the headsets included in their systems from a? China-based supplier, but they have experienced a significant decrease in overall headset quality. To correct the?problem, the company is considering producing their own headsets? in-house. The system is expected to have an? eight-year service life and produce savings and expenditures given in the table below. The building cost happens in year zero while the cost of facilities happens in year one. The annual savings and incremental costs are from year 1 to 8.? Also, there is no linear nor geometric gradient in this question.??
If the? firm's MARR is? 15%, use the NPW method to calculate the economic worth of producing the headsets in house.
The economic worth of producing the headsets in house is ?$______ thousand.? (Round to the nearest whole? number.)
In-House Headset Manufacturing Investment Now (building) $500,000 $2,200,000 First year (equipment and facilities) Annual savings in materials and quality inspection Incremental annual expenses Incremental annual income taxes Economic service life Net salvage value $5,000,000 $1,500,000 $800,000 8 years $1,500,000
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