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Safeauto, an automotive safety system supplier performed a make/buy analysis to for making a new safety system for driver alertness in autonomous vehicles. The safety
Safeauto, an automotive safety system supplier performed a make/buy analysis to for making a new safety system for driver alertness in autonomous vehicles. The safety system sells for $50 that will require initial investment of equipment that cost $200,000 with an annual operating cost of $25,000 that includes fixed cost. The variable cost is $20 per unit of the safety system. The expected life of the equipment is 5 years after which there is no salvage value. If the minimum attractive rate of return of 6% per year and projected sales of 500 safety systems per year a. Determine the breakeven point b. An engineer investigated that a supplier could make the filter for $30 each. Determine whether Safeauto should make or buy the filters
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