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A software developer is planning to develop, produce and sell new security software. The key parameter values of the three software packages under consideration are
A software developer is planning to develop, produce and sell new security software. The key parameter values of the three software packages under consideration are provided below. Parameters 1. Initial Cost ($) AC 650,000 KLM 740,000 2. Revenues ($) 350,000 at EOY1 increasing by $4,000 annually thereafter 450,500 at EOY1 decreasing by $5,000 annually thereafter Delta 790,000 450,500 at EOY1 increasing by 1% annually to EOY5 inclusively; $470,000 at EOY6 decreasing annually by $2,000 thereafter. 300,000 at EOY1 increasing by 2% annually thereafter 3. Operating costs ($) 180,000 at EOY1 increasing by 2% annually thereafter 90,000 252,000 at EOY1 decreasing by 1% annually thereafter 100,000 120,000 4. End-of-life salvage value ($) 5. Useful life (years) 5 5 10 All parameter values are fictitious. EOY = End-of-year Industry standard for backhoes = 4 years MARR = 10% 2 1. 2. AC's Net Present Worth (NPW). KLM's Net Future Worth (NFW) at EOY5. Delta's NFW at EOY10. 3. 4. AC's Annual Equivalent Worth (AEW)
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