Breakeven between purchasing and manufacturing the mechanism
Course:- Financial Management
Reference No.:- EM131180584

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Toys R Us can purchase mechanisms to be used in making certain toys for $60 each. They can manufacture their own mechanisms for $7000 per year fixed cost plus $35 for each mechanism, provided they purchase a machine for $100000 that will have a 10 year life and salvage value of $20000. For MARR of 12% per year, what annual production rate would result in breakeven between purchasing and manufacturing the mechanisms?

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