3. Present Value Analysis The Education Association of Metro Orlando (EAMO) is a public service organization that provides after-school services for children. EAMO recently received a federal grant to improve after-school security for children. The grant amounts to $2 million and will be received over five years. It is designated to improve the communication networking system that monitors the traffic in three school districts. After a comprehensive review of all similar systems available on the market, EAMO identifies two systems that meet its specific need. One is EOP (Electronic Operating Patrol) and another is PMS

(Pedestrian Monitoring System). The cost of both systems in the next five years, including the current year, is listed in Table 4.3.

1. Assuming a 5 percent annual discount rate, what are the PVCs for EOP and PMS? Which system should EAMO purchase based on your PVC analysis?

2. Assuming a 10 percent annual discount rate, which system should EAMO purchase?

3. Assume that the life of EOP is six years and that of PMS is five years. Which system should EAMO purchase? Why? (Make assumptions if necessary and explain them.)