Company makes the part instead of buying it from supplier

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Reference no: EM131338611

X Company currently buys 7,500 units of a component part each year from a supplier for $7.80 each, but it is considering making the part instead. In order to make the part, X Company will have to buy equipment that will cost $150,000. The equipment will last for six years, at which time it will have zero disposal value. X Company estimates that it will cost $30,810 a year to make the 7,500 units. What is the approximate rate of return if X Company makes the part instead of buying it from the supplier? Submit answer as .XX.

Reference no: EM131338611

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