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Show transcribed image text Hillsdale is considering two options for comparable computer software Option A will cost $25000 today plus annual license renewals of $1000 for three years The annual

Show transcribed image text Hillsdale is considering two options for comparable computer software. Option A will cost $25,000 today plus annual license renewals of $1,000 for three years. The annual renewals include technical support. Option B will cost $20,000 today with technical support being an add-on charge. The estimated cost of technical support is $4,000 the first year, $3,000 the second year, and $2,000 the third year. In both options, assume the software is purchased and paid for at the beginning of year one, but that the annual renewals and technical support are paid for at the end of each year. Interest is at 8%. Ignore income taxes. Required: Determine which option should be chosen based on present value considerations.

 

Apr 29 2020 View more View Less

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