Question
Kermit is considering purchasing a new computer system. The purchase price is $129,645. Kermit will borrow one-fourth of the purchase price from a bank at
Kermit is considering purchasing a new computer system. The purchase price is $129,645. Kermit will borrow one-fourth of the purchase price from a bank at 10 percent per year 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 $6,474 at that time. Over the 5-year period, Kermit expects to pay a technician $20,000 per year to maintain the system but will save $61,807 per year through increased efficiencies. Kermit uses a MARR of 12 percent to evaluate investments. What is the net present worth for this new computer system?
Enter your answer in this format: 12345
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started