Determine if the decision to buy the new computer

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A company purchases a new computer for $15000. The computer is used for 4 years and is then sold for $2000. Annual disbursements for operating, and maintaining is $3000 over a 4 year period. The computer replaced an older manual system that cost $8000/ year. On the basis of 15% MARR (i.e., reinvestment rate), determine if the decision to buy the new computer was economically sound. That is, what was the "external rate of return"?

Reference no: EM13288294

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