The office's 4 Canon machines are expected to last 5 more years. They can each be sold immediately for $700; their resale value in 5 years will be zero. The Canon machines require 4 operators; they are paid $7.60 an hour each and work 40 hours a week and 52 weeks a year. The machines break down periodically, resulting in annual repair costs of $1,080 for each machine. Supplies cost $960 a year for each machine.

The total cost of the new Kodak equipment will be $118,000. The equipment will have a life of 5 years and a total disposal value at that time of $2,100. The Kodak system will require only 3 regular operators. Kodak has offered the college a maintenance contract that covers all machine breakdowns; the cost of the contract is $1,200 per year. Total cost for all supplies will be $3,240 per year.

Required

Assuming a discount rate of 10%, compute the difference between the net present value if the registrar's office keeps the Canon copiers and the net present value if it buys the Kodak copiers. [Note: If your results favor keeping the Canon copiers, enter your net present value difference as a positive number; if your results favor buying the Kodak copiers, enter your net present value difference as a negative number.]

Answer rating: 100% (QA)

Existing New Period PVF 10 Amount PV Amount PV Labor ... View the full answer