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Galvanized Products is considering purchasing a new computer system for their enterprise data management system The vendor has quoted a purchase price of $100000 Galvanized Products is planning to

Galvanized Products is considering purchasing a new computer system for their enterprise data management system. The vendor has quoted a purchase price of $100,000. Galvanized Products is planning to borrow l/4th of the purchase price from a bank at 15.00% compounded annually. The loan is to be repaid using equal annual payments over a 3-year period. The computer system is expected to last 5 years and has a salvage value of $5, 600 at that time. Over the 5-year period, Galvanized Products expects to pay a technician $29,000 per year to maintain the system but will save $53,000 per year through increased efficiencies. Galvanized Products uses a MARR of 15.00%/year to evaluate investments. a. What is the present worth of this investment? $ b. What is the decision rule for judging the attractiveness of investments based on present worth? c. Should the new computer system be purchased? C. should the new compute system be purchased?

 

Apr 05 2020 View more View Less

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