The Atlantic Medical Clinic can purchase a new computer system that will save $5,000 annually in billing costs. The computer system will last for eight years and have no salvage value.

Click here to view Exhibit 8B-1 and Exhibit 8B-2, to determine the appropriate discount factor(s) using tables.

Required:

Up to how much should the Atlantic Medical Clinic be willing to pay for the new computer system if the clinics required rate of return is: (Round discount factor to 3 decimal places.)

	Reduction in Billing Cost	x	Discount Factor
1. Twelve Percent		x
2. Thirteen Percent		x

= Present Value

1. =

2. =