My company is currently buying an item for $54. We can make the same item internally for a labor cost of $17 a material cost of $11 and a tooling cost of $3 per part. However I need to purchase a machine to do the job. The machine will cost $550,000 and will require annual maintenance of 135,000. The machine will have a salvage value of 135,000 in seven years – At 6% interest what is the break even point?

 

+ Limits 1-50,000 50k-75k 75-100 100-335 Range Rate 50,000 15 25,000 .25 25,000 .34 235,000 .39 Max 7,500 6,250 8,500 91,650 Total 7,500 13,750 22,250 113,900