Lease accounting. ACFI 5069 QUESTION THREE A wind turbine manufacturer buys specialist steel bolts from an outside supplier at a price of 20.00 each and uses 30,000 bolts per year. It expects production to remain stable in the future. The manufacturer believes that it would be cheaper to make these specialist steel bolts themselves. Variable in-house production costs are estimated to be only 10 per bolt. The necessary equipment would cost 500,000 and would be depreciated over 10 years with a scrap value, at the end of the machinery's life, of 50,000. The new operations would require additional working capital of 50,000. The company pays corporation tax at a rate of 20% and the cost of capital is 8%. a. Using NPV, compare the costs, over ten years, of the outside supplier and in-house proposal. (19 MARKS) b. Identify and comment on three assumptions that the company should investigate more fully, before deciding to go ahead. (6 MARKS) ws C HI