The additional investment in a new computer system is a certain ?$290,000. It is likely to save an average of ?$90,000 per year compared to the?old, outdated system. Because of?uncertainty, this estimate is expected to be normally?distributed, with a standard deviation of ?$5,500. The market value of the system at any time is its scrap?value, which is ?$19,000 with a standard deviation of ?$4,000. MARR on such investments is 12?% per year. What is the smallest value of N?(the life of the?system) that can exist such that the probability of getting a 12?% internal rate of return or greater is 0.70?? Ignore the effects of income taxes. Also note that market value is independent of N. (Hint?: Start with N=4 ?years.)

The additional investment in a new computer system is a certain $290,000. It is likely to save an average of $90,000 per year compared to the old, outdated system. Because of uncertainty, this estimate is expected to be normally distributed, with a standard deviation of $5,500. The market value of the system at any time is its scrap value, which is $19,000 with a standard deviation of $4,000. MARR on such investments is 12% per year. What is the smallest value of N (the life of the system) that can exist such that the probability of getting a 12% internal rate of return or greater is 0.70? Ignore the effects of income taxes. Also note that market value is independent of N. (Hint: Start with / = 4 years.) Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year. Click the icon to view the normal probability table. The smallest value of the life of the system is years. (Type a whole number.)Discrete Compounding; i=12% Single Payment Uniform Series Compound Compound Sinking Capital Amount Present Amount Present Fund Recovery Factor Worth Factor Factor Worth Factor Factor Factor To Find F To Find P To Find F To Find P To Find A To Find A Given P Given F Given A Given A Given F Given P N FIP PIF FIA PIA AIF AIP 1.1200 0.8929 1.0000 0.8929 1.0000 1.1200 1.2544 0.7972 2.1200 1.6901 0.4717 0.5917 1.4049 0.7118 3.3744 2.4018 0.2963 0.4163 1.5735 0.6355 4.7793 3.0373 0.2092 0.3292 1.7623 0.5674 6.3528 3.6048 0.1574 0.2774 1.9738 0.5066 8.1152 4.1114 0. 1232 0.2432 2.2107 0.4523 10.0890 4.5638 0.0991 0.2191 2.4760 0.4039 12.2997 4.9676 0.0813 0.2013 2.7731 0.3606 14.7757 5.3282 0.0677 0.1877 10 3.1058 0.3220 17.5487 5.6502 0.0570 0.1770 11 3.4785 0.2875 20.6546 5.9377 0.0484 0.1684 12 3.8960 0.2567 24.1331 6.1944 0.0414 0.1614 13 4.3635 0.2292 28.0291 6.4235 0.0357 0.1557 14 4.8871 0.2046 32.3926 6.6282 0.0309 0.1509 15 5.4736 0.1827 37.2797 6.8109 0.0268 0.1468