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Q3. The Microsoft has just installed sets of MS office in Qatar University computer facilities. The administration wants to know the total equivalent cost of

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Q3. The Microsoft has just installed sets of MS office in Qatar University computer facilities. The administration wants to know the total equivalent cost of all future costs incurred to purchase the software system. The system has an installed cost of $20,000 and an additional cost of $5,000 after 15 years. The annual software maintenance contract cost is $1,000 for the first 5 years and $1,200 thereafter. In addition, there is expected to be a recurring major upgrade cost of $10,000 every 12 years. Assume that i=5% per year for county funds. If the new system will be used for the indefinite future, answer the following questions. (total 20 pt) (1) Draw a cash flow diagram for two cycles. (2 pt) (2) The $20,000 occurs at the beginning is a non-recurring cash flow. True or False? (2 pt) (3) Calculate the Capitalized Cost value. (12 pt) (4) Calculate the AW value. (4 pt)

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