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Racer industries is currently purchasing Part No. 76 from an outside supplier for $99 per unit. Because of supplier reliability problems, the company is considering

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Racer industries is currently purchasing Part No. 76 from an outside supplier for $99 per unit. Because of supplier reliability problems, the company is considering producing the part internally in an idle manufacturing plant. Annual volume over the next 6 years is expected to total 281,000 units at variable manufacturing costs of $94 per unit. Racer must acquire $99,000 of new equipment if it reopens the plant. The equipment has a 6year service life, a $15,900 salvage value, and will be depreciated by the straight-line method. Repairs and maintenance are expected to average $7,100 per year in years 4-6, and the equipment will be sold at the end of its life. Required: Use the net-present-value method (total-cost approach) and a 20% 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 nearest dollar amount.) Racer industries is currently purchasing Part No. 76 from an outside supplier for $99 per unit. Because of supplier reliability problems, the company is considering producing the part internally in an idle manufacturing plant. Annual volume over the next 6 years is expected to total 281,000 units at variable manufacturing costs of $94 per unit. Racer must acquire $99,000 of new equipment if it reopens the plant. The equipment has a 6year service life, a $15,900 salvage value, and will be depreciated by the straight-line method. Repairs and maintenance are expected to average $7,100 per year in years 4-6, and the equipment will be sold at the end of its life. Required: Use the net-present-value method (total-cost approach) and a 20% 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 nearest dollar amount.)

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