What is net present worth for this new computer system

Assignment Help Business Economics

Reference no: EM13733427

Kermit is considering purchasing a new computer system. The purchase price is $129,090. 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 $7,841 at that time. Over the 5-year period, Kermit expects to pay a technician $20,000 per year to maintain the system but will save $69,167 per year through increased efficiencies. Kermit uses a MARR of 12 percent to evaluate investments. What is the net present worth for this new computer system?

Reference no: EM13733427

Questions Cloud

Marketing consists primarily of selling and advertising : Marketing consists primarily of selling and advertising, The broadest and simplest definition of marketing states that it is the development and efficient distribution of products for consumer segments

Real national income can never exceed its potential level : The direct and excess burdens from an excise tax are greater the less elastic is demand in the market. Real national income can never exceed its potential level.

Cottagers on opposite sides of a small lake : Suppose that Ian and Mike are cottagers on opposite sides of a small lake. Ian values electricity at his cottage at $500 and Mike at $700, but in order to get electricity for their properties a trunk line costing $1000 must be built. If they are unab..

Uncertain according to economic principles : Explain why each of the following statements is True, False, or Uncertain according to economic principles. Use diagrams where appropriate. Unsupported answers will receive no marks. It is the explanation that is important. The Ontario government now..

What is net present worth for this new computer system : Kermit is considering purchasing a new computer system. The purchase price is $129,090. 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 o..

Compute the competitive equilibrium price and quantity : Consider a market with demand function D(p) = 1000 ? 10p and aggregate supply function S(p) = ? 200 + 20p if p ? 10 [and S(p) = 0 otherwise]. Compute the competitive equilibrium price and quantity, as well as the equilibrium value of consumer surplus..

Consider a competitive market in long run equilibrium : Consider a competitive market in long run equilibrium (all firms are identical with a U-shaped cost structure, there is free entry/exit in the market, and there are no other external price effects). Suppose the government imposes a fixed fee per year..

About the unemployment rate : Find an article (newspaper, magazine or online) about the unemployment rate. Use the article to answer the following questions: What is the current unemployment rate in the US? Is the unemployment rate rising, remaining the same, or decreasing? There..

Relatively elastic-unit elastic and relatively inelastic : Laurie’s demand for x is given by . Which of the following best describes Laurie’s demand for x when the price of x changes if her income is 10 and px = 2? (a) Relatively elastic (b) Unit Elastic (c) Relatively inelastic (d) Perfectly inelastic (e) N..

User Account

All Pages