ABC Ltd is a growing renewable energy manufacturing company specializing in Parabolic Solar Cookers, which are widely used for rural cooking…

ABC Ltd is a growing renewable energy manufacturing company specializing in Parabolic Solar Cookers, which are widely used for rural cooking programs, NGO sustainability projects, and government-sponsored green initiatives. Over the past few years, ABC Ltd has seen a steady rise in demand due to increasing awareness of clean energy solutions and state-level subsidies. Currently, ABC Ltd fabricates the metal frame, stand, and support structures of the solar cooker at their facility. However, one critical component—the Concentrator Dish (the reflective parabola that focuses sunlight)—is being purchased from an external vendor, PQR Ltd, at a cost of 2,000 per unit. Recently, ABC Ltd has faced several operational challenges with the outsourced dish supplier like Supply Delays, Quality Inconsistency, Rising Procurement Costs, large government order requiring strict timelines and quality standards. Because of these concerns, management is considering backward integration—bringing dish manufacturing in-house to gain greater control over cost, quality, and delivery. To produce the concentrator dishes internally, management is evaluating the cost structure: Raw Material:700 per unitLabour Cost:300 per unitOther Variable Costs:100 per unitTotal Variable Cost per unit = 1,100 To manufacture the dish internally, ABC Ltd must purchase new machinery costing - 25,00,000 with: Useful life: 5 yearsDepreciation rate: 20% per year (straight-line)Tax rate: 30%Discount rate: 10%Expected annual production: 1,000 unitsPresent value annuity factor for 10% over 5 years: 3.7908 The leadership team wants to understand whether in-house manufacturing is financially viable compared to continuing purchases from PQR Ltd. Based on the above facts you are required to answer the following questions (MCQs 1 to 5):