Verizon 11:02 AM a s1.lite.msu.edu Eric Christian DelannoyStudent section: 001 N

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Verizon 11:02 AM a s1.lite.msu.edu Eric Christian DelannoyStudent section: 001 New Messages Courses Help Logout ACC230, Spring 2018 - Survey of Accounting Concepts Main Menu Contents Grades Course Contents »... » SECOND CHANCE Timer Notes Evaluate Feedback PrintInfo X Company currently makes 8,000 units of a component part each year, but is considering buying it from a supplier for $7.80 each. The current annual cost of making the part is $67,000. The supplier wants X Company to sign a contract for the next six years. IfX Company buys the part, it will be able to sell the equipment that it currently uses to make the part for $18,000, but the equipment will have no salvage value at the end of six years. Assuming a discount rate of 4%, what is the net present value of buying the part instead of making it? Submit AnswerTries 0/3 Communication Blocked Send Feedback

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Year PV NPV Make Cost 67000 Buying Cost 62400 Saving in Buy 4600 1-6 5.242137 24114 Salvage Value 18000 0 1 18000 Net Present Value 42114 PV Working 4% 1 0.9615 2 0.9246 3 0.8890 4 0.8548 5 0.8219 6 0.7903 5.2421

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