Question
Galvanized Products is considering purchasing a new computer system for their enterprise data management system. The vendor has quoted a purchase price of $100,000. Galvanized
Galvanized Products is considering purchasing a new computer system for their enterprise data management system. The vendor has quoted a purchase price of $100,000. Galvanized Products is planning to borrow 1/4th of the purchase price from a bank at 18.00% 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 $4,800 at that time. Over the 5-year period, Galvanized Products expects to pay a technician $23,000 per year to maintain the system but will save $58,000 per year through increased efficiencies. Galvanized Products uses a MARR of 15.00%/year to evaluate investments. What is the present worth of this investment?
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