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(b) Smart Spot Ltd has received 2 bids to improve its commercial system. Proposal I will cost the firm at an initial cost of $350,000
(b) Smart Spot Ltd has received 2 bids to improve its commercial system. Proposal I will cost the firm at an initial cost of $350,000 with an annual maintenance cost at $5,000, and the life is 5 years. Proposal 2 offers a quality improvement of the system with an expected life of 9 years. The annual maintenance cost is zero, but the system will have to be upgraded in every 3 years at a cost $2,500. If the firm's current MARR is 10% per year, how much can it afford on proposal 2 initially so the two proposals break even
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