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5. Miguel the Prawn's loan sharking business is getting big and he needs to improve his data management system. He has two options: Option A:
5. Miguel the Prawn's loan sharking business is getting big and he needs to improve his data management system. He has two options: Option A: Purchase a pre-made software for an initial cost of $45,000 and should last for 10 years. Operations and maintenance cost will be $1,500 per year. Option B: Purchase a custom-made software, which will last for 10 years, with an annual operation and maintenance cost of $100. Grading Criteria Both software systems will have no salvage value. Miguel uses a marginal tax rate of 50% and straight-line depreciation. If Miguel's after-tax MARR is 12%, what is the maximum amount that should be spent on the custom-made software? (6.0 pt total) Setup: 4.50 pt Calculations: 1.00 pt Statement: 0.50 pt
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