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Question 2 (15 points) To make an item inhouse, equipement costing $230,000 must be purchased. It will have a life of 4 years, an annual
Question 2 (15 points) To make an item inhouse, equipement costing $230,000 must be purchased. It will have a life of 4 years, an annual cost of $78,000, and each unit will cost $65 to manufacture. Buying the item externally will cost $100 per unit. At i = 15% per year, it is cheaper to make the item inhouse if the number produced per year is above _units. Your Answer: Which of the following is not a concern when using payback analysis to select between alternatives? a) No-return payback doen not consider the time value of money. b) No net cash flows after the payback period are considered in the analysis. c) An incremental analysis must be performed over the least common multiple of lives. d) Short-lived alternatives ube favored over longer-lived altenatives that produce a higher rate of return. e) All of the above are a concern when using payback analysis
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