What is the approximate rate of return

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Question - X Company currently buys 6,500 units of a part each year from a supplier for $7.60 per part, but it is considering making the part instead. It paid a consulting firm $12,000 to do the make/buy analysis. The consulting firm determined that X Company would have to buy equipment costing $150,000 to make the part. The equipment would last for six years, at which time it would have zero disposal value. The consulting company also estimated that it would cost X Company $21,710 a year to produce the 6,500 units.

Required - What is the approximate rate of return if X Company makes the part instead of buying it from the supplier?

Reference no: EM133065911

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