Should the company replace vigilant with the software tool

Assignment Help Financial Management

Reference no: EM131552568

The Cloud Computing Company (CCC) has a contract with Vigilant Associates to monitor the availability of the software applications it hosts for its customers. The Vigilant contract costs CCC $100,000 per year, paid annually in advance. CCC is considering replacing Vigilant at the end of the current contract year with a software monitoring tool that it could use to perform the monitoring itself with no additional labor costs. The cost of the software is a one-time $200,000 perpetual license fee paid at the start of the engagement, followed by a $40,000 maintenance fee paid annually in advance. The software is expected to have a useful life of five years. The hurdle rate for CCC is 5%. Should the Company replace Vigilant with the software tool? Why or why not? How would your conclusion change if the hurdle rate was 20%?

Reference no: EM131552568

Questions Cloud

Why a faraday of charge might not always generate a maw : Faraday's results are shown in Table along with the known atomic weights. Use these data to deduce the number of faradays required to produce one mole.

Calculate the npv-discounted payback period and irr : Aircraft Equipment LLC is considering two investment initiatives for 2016. Calculate the NPV, discounted payback period, and IRR for each initiative.

What will be jbs wacc : What will be JBs WACC - What would be the weights used in the calculation of BetterPie's WACC - What would be the weights used in the calculation

What other trends in employment safety do you predict : What other trends in employment safety do you predict, and what is your evidence for that prediction? How should companies respond? How would you respond? Why?

Should the company replace vigilant with the software tool : Should the Company replace Vigilant with the software tool? Why or why not? How would your conclusion change if the hurdle rate was 20%?

What is the electric potential and potential energy : The diagram in Fig. shows two charged parallel plates separated by 5mm. A device, which might be a battery or a power supply, has been attached to the two plate

Current financial performance levels : This will generate additional cash flows of $450,000 per year for seven years, after which time plant will revert to its current financial performance levels

Identify characteristics of a mild to moderate disability : Identify and define characteristics of a mild to moderate disability as outlined by Individuals With Disabilities Education Act.

Deep water drilling can add one rig every-six months : The Company’s cost of capital is 6%. If Deep Water Drilling can add one rig every-six months, how many should it acquire, and why?

User Account

All Pages