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A widget manufacturer currently produces 220,000 units a year. It buys widget lids from an...

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Accounting

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A widget manufacturer currently produces 220,000 units a year. It buys widget lids from an outside supplier at $2a lid. Th plant manager believes it would be cheaper to make these lids rather than buy them. Direct production costs are estimated to be only $1.50 a lid. The necessary machinery would cost $150,000 and would last ten years. This investment qualifies for 100 percent bonus depreciation. The salvage value of the plant will be zero dollars at the end of ten years. The plant manager estimates that the operation would require additional working capital of $30,000 that is recoverable at the end of the ten years. If the company pays tax at a rate of 21% and the cost of capital is 15%, would you support the plant manager's proposal? State any additional assumptions that you need to make. $239,707.38$301,422.11$257,863.92$296,416.10$201,251.32

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