Question

Galvanized Products is considering the purchase of a new computer system for their enterprise data management...

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?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Galvanized Products is considering the purchase of a new computer system for their enterprise data management...
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...
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...
Red Gerard, Inc., is considering purchasing a new computer system for their enterprise data management system....
Red Gerard, Inc., is considering purchasing a new computer system for their enterprise data management system. The vendor has quoted a purchase price of $200,000. RGI is planning to borrow one-fourth of the purchase price from a bank at 15% compounded annually and the loan is to be paid back over a 3-year period using equal annual payments. The computer system is expected to last 5 years and then have a salvage value of $5,000. Over this period, RGI will...
2. Kermit is considering purchasing a new computer system. The purchase price is $107918. Kermit will...
2. Kermit is considering purchasing a new computer system. The purchase price is $107918. Kermit will borrow one-fourth of the purchase price from a bank at 10 percent per year 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 $7937 at that time. Over the 5-year period, Kermit expects to pay a technician $20,000 per year to maintain...
Ms. Child is considering the purchase of a new food packaging system. The system costs $221,358....
Ms. Child is considering the purchase of a new food packaging system. The system costs $221,358. Ms. Child plans to borrow one-third of the purchase price from a bank at 4.5% per year compounded annually. The loan will be repaid using equal, annual payments over a 7-year period. The system is expected to last 15 years and have a salvage value of $22,445 at that time. Over the 15 year period, Ms. Child expects to pay $987 per year for...
Ms. Child is considering the purchase of a new food packaging system. The system costs $76342....
Ms. Child is considering the purchase of a new food packaging system. The system costs $76342. Ms. Child plans to borrow one-third of the purchase price from a bank at 4.5% per year compounded annually. The loan will be repaid using equal, annual payments over a 7-year period. The system is expected to last 15 years and have a salvage value of $21725 at that time. Over the 15 year period, Ms. Child expects to pay $1077 per year for...
O’Brien Inc. is considering the purchase of a new computer system (Mac) for $180,000. The system...
O’Brien Inc. is considering the purchase of a new computer system (Mac) for $180,000. The system will require an additional $20,000 for installation. If the new computer is purchased, it will replace an old system that has been fully depreciated. The new system will be depreciated over a period of 5 years using straight-line depreciation. If the Mac is purchased, the old system will be sold for $35,000. The Mac system, which has a useful life of 5 years, is...
Hicks is considering the purchase of a new computer system for $80,000, plus the 6 percent...
Hicks is considering the purchase of a new computer system for $80,000, plus the 6 percent Ohio State sales tax. The system will require an additional $10,000 for installation. If the new computer is purchased it will replace an old system that has been fully depreciated. The computer system, which has a useful life of 10-years, is expected to increase revenues by $32,000 per year over its useful life. Operating costs are expected to decrease by $2,000 per year over...
Chema Corporation is considering the purchase of a new computer system which will be able to...
Chema Corporation is considering the purchase of a new computer system which will be able to digitally process customer orders. Currently, Chema Corporation pays a number of employees a total of $50,000 per year to process orders and the new computer system will eliminate that expense. The new computer system costs $150,000 to purchase and install and has a 5 year life. The computer system will be sold at the end of the project for a net cash inflow of...
Your firm is contemplating the purchase of a new $605,000 computer-based order entry system. The system...
Your firm is contemplating the purchase of a new $605,000 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $89,000 at the end of that time. You will save $188,000 before taxes per year in order processing costs, and you will be able to reduce working capital by $104,000 (this is a one-time reduction). If the tax rate is 21 percent, what is the IRR for this project?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT