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lacer industries is currently purchasing Part Na. 76 from an outside supplier for 584 per unit Because of supplier rellability problems, he compary is considering
lacer industries is currently purchasing Part Na. 76 from an outside supplier for 584 per unit Because of supplier rellability problems, he compary is considering producing the part internally in an idle manufacturing plant. Annual volume over the next 6 years is xxpected to total 296,000 units at varlable manufacturing costs of 579 per unit. Racer must acquire 584,000 of new equipment if it reopens the plant the equipment has a 6 -year service iffe, a 514,400 salvage alue, and will be depreciated by the straighttine method. Repairs and maintenance are expected to average $5,600 per year in years 46, and the equipment will be sold at the end of its ille. Required: Use the net-present-value method (total-cost approach) and a 14\% hurdle rate to determine whether Racer should make or buy Part No. 76. Ignore income taxes. (Negative amounts should be indicated by a minus sign. Round your answers to the necrest dollar amount.)
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