37. Galvanized Products is considering the purchase of a new computer system for their enterprise data management system. The vendor has quoted a purchase price of $100,000. Galvanized Products is planning to borrow onefourth of the purchase price from a bank at 15 percent 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 $5,000 at that time. Over the 5-year period, Galvanized Products expects to pay a technician $25,000 per year to maintain the system but will save

$55,000 per year through increased effi ciencies. Galvanized Products uses a MARR of 18 percent/year to evaluate investments.

a. What is the future worth of this investment?

b. What is the decision rule for judging the attractiveness of investments based on future worth?

c. Should the new computer system be purchased?