Payroll Inc. Office Services is considering the purchase of a new computer system to replace the one in operation. Data on the new computer system are as follows:

Cost $$12,000$

Salvage value at the end of five years $$1,000$

Useful life, in years $5$

Annual operating cost $$4,000$

If the existing computer system is kept and used, it would require the purchase of additional hardware a year from now costing $$2,000.$ After the use of the system for $5$ years, the salvage value would be $$300.$ Additional information on the existing system is as follows:

Additional years of use $5$

Annual operating costs $$9,000$

Remaining book value $$12,000$

Current salvage value $$3,000$

Cost of capital $12\%$

The company uses the straight$-$line method of depreciation.

Required:

Complete a Net Present Value analysis, and recommend whether or not the new system should be purchased.