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Your company is considering whether to in source or to purchase a part for your product. In order to produce the part yourself, you will need to purchase the raw materials for a cost of $800 per part. It takes 6 months to create 90 parts. The total cost to produce one part is $870.15, including labor. The cost to purchase one part is $915.67, and you have 60 days to pay the invoice upon receipt of the parts. What would you recommend the company do if the annual discount rate is 8%? What if it were 12%? (Assume 30 days/month.)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91725624

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