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Galvanized Products is considering purchasing a new computer system for their enterprise data management system. The vendor has quoted a purchase price of $120,000. Galvanized
Galvanized Products is considering purchasing a new computer system for their enterprise data management system. The vendor has quoted a purchase price of $120,000. Galvanized Products is planning to borrow one-fourth of the purchase price from a bank at 13% compounded annually. The loan is to be repaid using equal annual payments over a 3-year period. The computer system is expected to last 5 years and has a salvage value of $5,500 at that time. Over the 5 -year period, Galvanized Products expects to pay a technician $28,000 per year to maintain the system but will save $51,000 per year through increased efficiencies. Galvanized Products uses a MARR of 17%/ year to evaluate investments. a. What is the external rate of return of this investment? ERR= % Do all calculations to 5 decimal places and round your final answer to 2 decimal places. Tolerance is +/2 b. What is the decision rule for judging the attractiveness of investments based on external rate of return? c. Should the new computer system be purchased
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