The mayor of Trenton is considering the purchase of a new computer system for the city's tax department. The system costs $93,000 and has an expected life of five years. The mayor estimates the following savings will result if the system is purchased:

The mayor of Trenton is considering the purchase of a new computer system for the city's tax department. The system costs $93,000 and has an expected life of five years. The mayor estimates the following savings will result if the system is purchased: Year or Period 1 2 3 Savings $38,000 43,000 48,000 33,000 30,000 PV of $1 at 7% 0.935 0.873 0.816 0.763 0.713 PV of ordinary annuity at 7% 0.935 1.808 2.624 3.387 4.100 4 5 Trenton uses a 7% discount rate for capital-budgeting decisions. A salesperson from a different computer company claims that his machine, which costs $103,000 and has an estimated service life of four years, will generate annual savings for the city of $38,000. If the discount rate is 7%, the net present value of this system would be