What is the cost advantage of the best system

Reference no: EM132165653

Question - Should New Tech's computer system be replaced this year? The system has a salvage value now of $5000, which will fall to $4000 by the end of the year. The cost of lower productivity linked to the older computer is $3000 this year. New Tech uses an interest rate of 15%. What is the cost advantage of the best system? A potential new system costs $12,000 and has the following salvage values and lost productivity for each year:

Year	$	Lost Productivity
0	$12,000
1	9000	$0
2	7000	1000
3	5000	2000
4	3000	3000

Reference no: EM132165653

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