Randall UPS is a supplier of a variety of services for small businesses. Commercial printer, scanning, and copier equipment is being considered to replace a five$-$year$-$old machine. After the initial screening of a variety of systems, two integrated systems remain as potential replacements $-$ a new model from Konica Minolta and an updated and enhanced reconstructed model from Ricoh. The relevant information on the two machines are as follows:

Konica Minolta Ricoh

Installed Price $$24,500$ $$25,500$

Estimated costs $$4,300$ plus $$0\mathrm{.}015/$copy $$7,050$

Estimated salvage value $$10,500$ $$12,500$

Estimated useful life $5$ years $5$ years

Randall expects to charge customers $$0\mathrm{.}06$ per copy and sell $250,000$ copies annually; however, they are uncertain about their service volume estimate. The $$0\mathrm{.}06$ per copy they expect to charge customers and the maintenance & usage fees are not expected to change over the next five years. Randall requires a minimum pre$-$tax rate of return of $15\%$ on its equipment investments.

 

REQUIREMENTS:

 

$1.$ Using the NPV function in Excel determine the Net Present Value $($NPV$)$ for the Konica Minolta system for estimated volumes starting from $200,000$ copies$/$year to $300,000$ copies$/$year$,$ in increments of $5,000$ copies.

$2.$ Using the NPV function in Excel determine the $($NPV$)$ for the Ricoh system for estimated volumes starting from $200,000$ copies$/$year to $300,000$ copies$/$year$,$ in increments of $5,000$ copies.

$3.$ From your answers to the above, determine which copier you would recommend to Speedy at an annual volume of $2100,000,240,000,$ & $280,000$ copies

$4.$ Explain why the decision is different at different volumes.

Answer rating: 100% (QA)

Answer To solve this problem we need to calculate the Net Present Value NPV for the Konica Minolta and Ricoh systems at different annual copy volumes ... View the full answer