Interglobal Paper Company has asked for your help in comparing its present computer system with a new one its board of directors would like to see implemented. The proposed system costs and present system costs are as follows:

a. Using break-even analysis, determine the year in which Interglobal Paper will break even.

b. Graph the costs and show the break-even point.

Proposed System Costs Present System Costs $20,000 30,000 4,000 30,000 $11,500 50,000 3,000 Item Year 1 Equipment lease Salaries Overhead Development Year 2 Equipment lease Salaries Overhead Development Year 3 Equipment lease Salaries Overhead Development Year 4 Equipment lease Salaries Overhead Development $20,000 33,000 4,400 12,000 $10,500 55,000 3,300 $20,000 36,000 4,900 $10,500 60,000 3,600 $20,000 39,000 5,500 $10,500 66,000 4,000