You work in the pricing area for a division of Innovo Computers, a worldwide computer firm that sells servers for large data centers and other computing needs.

Innovo has invested heavily in R&D over the past 10 years has very valuable intellectual property associated with servers. Innovo was awarded multiple patents for innovations around low electricity usage in server systems. No other seller of computer servers can match the Innovo systems in this area.

You have received a request from a customer, FrelsCo, who is putting together a new IT system that will host an online transaction processing system to handle big data from real-time credit card transaction processing and analysis.

You are attempting to determine the economic value that such a system creates for your customers. You think FrelsCo is typical for banking and financial transaction firms overall, so you want to do a thorough analysis. Your summer intern gathered the data below for you.

• The next best alternative to Innovo Computers system (fully configured for the customer segment under study) is one from IQ Computers that is priced at $350,000.
• The manufacturing cost (Cost of Goods Sold or COGS) of the Innovo Computers system is $175,000; the manufacturing cost (COGS) of the IQ Computers server is $190,500.
• The amount of electricity needed to operate the Innovo system is expected to be 125 Kilowatts per hour while the IQ system uses 175 kilowatts per hour.
• The cost of a kilowatt of power can vary greatly during different times of the day, but a good average rate to use for estimating the cost of running the servers is $0.15 per kilowatt-hour.
• This system is expected to run and consume electricity 24 hours per day, seven days a week, 52.14 weeks per year.
• Industry analysis shows that the Total Cost of Ownership (TCO) of a system such as this includes a significant investment in support and maintenance. The IQ Computers system requires, on average, 14 hours per week of support and maintenance. The Innovo Computers system requires 20 hours per week of support and maintenance.
• Engineers who perform support and maintenance are paid, on average, $75 per hour.

Notes:

• Assume one year of operation throughout to simplify your calculations.
• Assume there are 52.14 weeks per year.

A) what is the TEV (Total Economic Value) of Innovo