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, what is the total cost of ownership for the new computer system from Year 0 to Year 4 (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 |
| 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 | ||||||||||
| 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%. |
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College Accounting Chapters 1-29
Authors: John J. Wild, Vernon J. Richardson, Ken W. Shaw
2nd Edition
0077398173, 978-0077398170
