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A company is considering the purchase of a new computer for its expanding accounting business. The key parameters of the three computers under scrutiny are
A company is considering the purchase of a new computer for its expanding accounting business. The key parameters of the three computers under scrutiny are provided below. Computer Small Large Medium Parameters 1. Initial cost (S) 200,000 300,000 500,000 160,000 at EOY1 204,000 at EOY1 350,000 at EOY1 increasing increasing decreasing annually by annually by annually by 2% 2. Revenues $5,000 thereafter 2,000 thereafter thereafter 95,000 at EOY1 308,000 at EOY1 125,000 at EOY1 decreasing increasing 3. operating Costs increasing annually by 4% annually by 2% annually by thereafter. thereafter $3,000 thereafter 4. End-of-life salvage -5,000 10,000 25,000 value 5 10 10 5. Useful life (years) Industry Standard 4 years MARR 10%
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