(Solution) - A make or buy decision is being considered for a -(2025 Original AI-Free Solution)

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Academic Level: Undergrad. (yrs 3-4)

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Pages: 5 Words: 1375

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A make or buy decision is being considered for a part that has been purchased from suppliers in the past. The savings are estimated to be $15,000 per year. The equipment to produce the part would cost $55,000 and have a life of seven years and no salvage value at that time. The organization wants to earn 10% after tax on its investments. Determine the operating cash flow of the investment and if it meets the desired after-tax ROI if straight-line depreciation is used and the effective tax rate is 50%.