A Construction Company is considering three methods of acquiring Revit Software for use by the Construction...

 

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A Construction Company is considering three methods of acquiring Revit Software for use by the Construction Managers. The alternatives are: 1. Purchase the software for $15,000 each. The software is expected to have a useful live of 4 years and an estimated residual trade value of $1,200 each. 2. Lease the software for 4 years for $4,500 per year paid in advance at the beginning of each year. (The Construction Company does not own the software in Alternative 2) 3. Purchase the software with $1,500 down payment and $5,400 yearly payment at the end of each year for 3 years. Assume the software has an estimated residual trade value of $1,200 each. If the contractor's MARR is 20%, which alternative should he choose? (Note: All alternatives involve equal lives.) A Construction Company is considering three methods of acquiring Revit Software for use by the Construction Managers. The alternatives are: 1. Purchase the software for $15,000 each. The software is expected to have a useful live of 4 years and an estimated residual trade value of $1,200 each. 2. Lease the software for 4 years for $4,500 per year paid in advance at the beginning of each year. (The Construction Company does not own the software in Alternative 2) 3. Purchase the software with $1,500 down payment and $5,400 yearly payment at the end of each year for 3 years. Assume the software has an estimated residual trade value of $1,200 each. If the contractor's MARR is 20%, which alternative should he choose? (Note: All alternatives involve equal lives.)

Answer rating: 100% (QA)

To determine which alternative the contractor should choose we need to calculate the present worth o... View the full answer