Varico produces HO-scale trains, including a diesel locomotive that sells 100,000 units annually. Each unit requires an electric motor. Presently these are purchased once a week from a local...

Varico produces HO-scale trains, including a diesel locomotive that sells 100,000 units annually.

Each unit requires an electric motor. Presently these are purchased once a week from a local

manufacturer for $10 apiece. However, a foreign firm has offered to sell Varico a container

of 100,000 motors of like quality for only $9.50 apiece. Given an interest rate of 15 percent,