Question: Galvanized Products is considering purchasing a new computer system for their enterprise data management system. The vendor has quoted a purchase price of $90,000. Galvanized

 Galvanized Products is considering purchasing a new computer system for their

Galvanized Products is considering purchasing a new computer system for their enterprise data management system. The vendor has quoted a purchase price of $90,000. Galvanized Products is planning to borrow one-fourth of the purchase price from a bank at 16% compounded annually. The loan is to be repaid using equal annual payments over a 3-year period. The computer system is expected to last 5 years and has a salvage value of $5,500 at that time. Over the 5-year period, Galvanized Products expects to pay a technician $26,000 per year to maintain the system but will save $55,000 per year through increased efficiencies. Galvanized Products uses a MARR of 20%/year to evaluate investments. a. What is the external rate of return of this investment? ERR = J% Do all calculations to 5 decimal places and round your final answer to 2 decimal places. Tolerance is +/-.2 bbat is the decisione foundaintbalotion fioctonte boodsentralto foto Galvanized Products is considering purchasing a new computer system for their enterprise data management system. The vendor has quoted a purchase price of $90,000. Galvanized Products is planning to borrow one-fourth of the purchase price from a bank at 16% compounded annually. The loan is to be repaid using equal annual payments over a 3-year period. The computer system is expected to last 5 years and has a salvage value of $5,500 at that time. Over the 5-year period, Galvanized Products expects to pay a technician $26,000 per year to maintain the system but will save $55,000 per year through increased efficiencies. Galvanized Products uses a MARR of 20%/year to evaluate investments. a. What is the external rate of return of this investment? ERR = J% Do all calculations to 5 decimal places and round your final answer to 2 decimal places. Tolerance is +/-.2 bbat is the decisione foundaintbalotion fioctonte boodsentralto foto

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!