Question
A contractor is considering the following three alternatives: a. Purchase a new computer system for $15,000. The systems is expected to last 6 years with
A contractor is considering the following three alternatives: a. Purchase a new computer system for $15,000. The systems is expected to last 6 years with a salvage value of $1,000. b. Lease a new computer system for $3,000 per year, payable in advance (at the start of the year). The system should last for 6 years. c. Purchase a used computer system for $8,200. It is expected to last 3 years with no salvage value. If a MARR of 8% is used, which alternative should be selected using a net present worth analysis? Which alternative would you select using an annualized cost method of analysis?
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