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

Galvanized Products is considering purchasing a new computer system for their enterprise data management system. The vendor has quoted a purchase price of \(\$ 130,000\). Galvanized Products is planning to borrow \(1/4\) th of the purchase price from a bank at \(12.00\%\) 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 \(\$ 5,400\) at that time. Over the 5-year period, Galvanized Products expects to pay a technician \(\$ 28,000\) per year to maintain the system but will save \(\$ 56,000\) per year through increased efficiencies. Galvanized Products uses a MARR of \(18.00\%/\) year to evaluate investments.
a. What is the present worth of this investment?
\[
\$
\]
Do all calculations to 5 decimal places and round final answer to 2 decimal places. Tolerance is \(\pm 1.00\).
 Galvanized Products is considering purchasing a new computer system for their

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!