Question

Galvanized Products is considering the purchase of 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 1/4th of the purchase price from a bank at
15% 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 $5,000 at that
time. Over the 5-year period, Galvanized Products expects to pay a
technician $25,000 per year to maintain the system but will save
$55,000 per year through increased efficiencies. Galvanized
Products uses a *MARR* of 18%/year to evaluate
investments.

What is the annual worth of the investment?

Answer #1

Galvanized Products is considering the purchase of 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 1/4th of the purchase price from a bank at
15% 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 $5,000 at that
time. Over the 5-year...

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 1/4th of the purchase price from a bank at
18.00% 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 $4,800 at that
time. Over the 5-year period, Galvanized...

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