QUESTION 16 5 points Save Answer An equipment manufacturer currently produces 40,000 units a year. It buys a part for the equipment from a outside supplier at a price of $1.35 a unit. The company is thinking of producing the part by itself which is likely to cost only 1.15 per unit. The investment required in year 0 for machinery is $100,000 (which will be obsolete after 5 years) and for working capital is $25,000 (which will be recovered at the end of 5 years). The investment in machinery would be depreciated to zero for tax purposes using a 5-year straight-line depreciation schedule. Expected proceeds from scrapping the machinery after 5 years are $10,000. If the company pays tax at a rate of 35% and the opportunity cost of capital is 14%, what is the net present value of the decision to produce the chains in-house instead of purchasing them from the supplier? (5 marks) For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). V S Paragraph Open Sans,s... 10pt E A I Q 5 X X O WORDS POWERED BY TINY