Business, 07.05.2020 03:00 straightbarz759

3. A Yellow Pages directory company must decide whether it should compose the ads for its clients inhouse or pay a production company to compose them. To develop the ads inhouse, the company will have to purchase computers, printers, and other peripherals at a cost of $12,000. The equipment will have a useful life of 3 years, after which it will be sold for $2000. The employee who creates the ads will be paid $45,000 per year. In addition, each ad will have an average cost of $8 to prepare for delivery to the printer. A total of 4000 ads are anticipated for the next few years. Alternatively, the company can outsource ad development at a fee of $20 per ad regardless of the quantity. The current interest rate is 8% per year. What is the break even amount, and which alternative is economically better

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