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A consulting firm is considering the purchase a new computer drafting system for $120,000. It is expected this will eliminate one employee, who with benefits

A consulting firm is considering the purchase a new computer drafting system for $120,000. It is expected this will eliminate one employee, who with benefits earns $32,000 annually. Annual operating and maintenance cost for the new system will be $4,000. The firm believes that in 7 years the system will be obsolete and have a salvage value of 10% of the first cost. Using as an annual interest rate of 10%, decide on the economic viability of the plan. Use present worth for comparison.

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