Answered step by step
Verified Expert Solution
Question
1 Approved Answer
WWW Inc. has decided to acquire a new Wi-Fi. It has three options. IBM: purchase cost of $338676 and operating costs of $20202 in year
WWW Inc. has decided to acquire a new Wi-Fi. It has three options. IBM: purchase cost of $338676 and operating costs of $20202 in year 1, $24030 in year 2, and $27500 in year 3 (paid at the end of each year). Cisco: purchase cost of $239347 and operating costs of $35087 in year 1, $35114 in year 2, and $36346 in year 3 (paid at the end of each year). Sun: purchase cost of $279070 and operating costs of $21190 in year 1, $20046 in year 2, and $20000 in year 3 (paid at the end of each year). Assume that WWW Inc. has a budget of $322912 for this investment and all web servers have a service life of 3 years. Based on the defender-challenger approach and given that the MARR is 9%, reinvestment rate is 7%, and minimum external rate of return is 5%, compute the incremental Benefit-Cost ratio of choosing the best Wi-Fi system (in economic terms) and then indicate your recommendation as follows: - answer "O" (without the commas) if your recommendation is IBM; - answer "1" (without the commas) if your recommendation is Cisco; - write down as your answer the value of the incremental B-C ratio if your recommendation is the Sun system. Note: round your answer to two decimal places, and do not include spaces, currency signs, plus or minus signs, nor commas
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