Question
Porter Auto Parts Company decides to purchase a new computer system. Below is the cost information they get from one potential supplier. Porter Auto Parts
Porter Auto Parts Company decides to purchase a new computer system. Below is the cost information they get from one potential supplier. Porter Auto Parts has a cost of capital of 10%. Using total cost of ownership analysis, how much is the cost in Year 1 at present value (keep two decimal places)?
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | |
| Purchase Price | $405,000 | $0 | $0 | $0 | $0 |
| Installation | $50,000 | $0 | $0 | $0 | $0 |
| Transition Costs | $300,000 | $100,000 | $5,000 | $0 | $0 |
| Employee Training | $100,000 | $300,000 | $100,000 | $5,000 | $5,000 |
| Ongoing Support | $10,000 | $0 | $0 | $0 | $0 |
| Future Upgrades | $0 | $5,000 | $10,000 | $10,000 | $10,000 |
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
The Theory And Practice Of Investment Management
Authors: Frank J Fabozzi, Harry M Markowitz
2nd Edition
0470929901, 9780470929902
