Heavenly Pizza fares very well with its competition in offering fast delivery. Many students at the area universities and community colleges work part-time delivering orders made via the web. The owner, Jerry, a software engineering graduate, plans to purchase and install five portable, in-car systems to increase delivery speed and accuracy. The systems provide a link between the web order-placement software and the On-Star system for satellite-generated directions to any address in the area. The expected result is faster, friendlier service to customers and larger income.  Each system costs 4600 birr, has a 5-year useful life, and may be salvaged for an estimated 300 birr. Total operating cost for all systems is 1000 birr for the first year, increasing by 100 birr per year thereafter. The MARR is 10%. Perform an annual worth evaluation for the owner that answers the following questions.
(a) How much new annual net income is necessary to recover the investment at the MARR of 10% per year?  
(b) Jerry estimates increased net income of 6000 birr per year for all five systems. Is this project financially viable at the MARR?  
(c) Based on the answer in part (b), determine how much new net income Heavenly Pizza must have to economically justify the project. Operating costs remain as estimated.

Answer rating: 100% (QA)

ANSWER Answer a Years 0 1 2 3 4 5 6 7 Cost of system 66005 3300000 Salvage value 6005 300000 Operati... View the full answer