EXERCISE $1***$ A$-5$ Basic Present Value Concepts LO$14-7$

The Atlantic Medical Clinic can purchase a new computer system that will save $$7,000$ annually in billing costs. The computer system will last for eight years and have no salvage value.

Required:

What is the maximum price $($i$.$e$.,$ the price that exactly equals the present value of the annual savings in billing costs$)$ that the Atlantic Medical Clinic should be willing to pay for the new computer system if the clinic's required rate of return is:

Sixteen percent?

Twenty percent?