Kermit is considering purchasing a new computer system. The purchase price is $131,870. Kermit will borrow one-fourth of the purchase price from a bank at 10 percent per year 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 $7,452 at that time. Over the 5-year period, Kermit expects to pay a technician $20,000 per year to maintain the system but will save $78,952 per year through increased efficiencies. Kermit uses a MARR of 12 percent to evaluate investments. What is the net present worth for this new computer system?

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The following is the balance sheet of Korver Supply Company at December 31, 2020 (prior year). KORVER SUPPLY COMPANY Balance Sheet At December 31, 2020 Assets $125,000 340,000 290,000 155,000 Cash Accounts receivable Inventory Furniture and fixtures (net) Total assets $910,000 Liabilities and Shareholders' Equity Accounts payable (for merchandise) Notes payable Interest payable $270,000 280,000 7,000 120,000 233,000 Common stock Retained earnings Total liabilities and shareholders' equity $910,000 Transactions during 2021 (current year) were as follows: $1,000,000 980,000 520,000 530,000 470,000 360,000 14,000 1. Sales to customers on account 2. Cash collected from customers 3. Purchase of merchandise on account Cash payment to suppliers Cost of merchandise sold 4. 5. Cash paid for operating expenses Cash paid for interest on notes 6. 7. The following is the balance sheet of Korver Supply Company at December 31, 2020 (prior year). KORVER SUPPLY COMPANY Balance Sheet At December 31, 2020 Assets $125,000 340,000 290,000 155,000 Cash Accounts receivable Inventory Furniture and fixtures (net) Total assets $910,000 Liabilities and Shareholders' Equity Accounts payable (for merchandise) Notes payable Interest payable $270,000 280,000 7,000 120,000 233,000 Common stock Retained earnings Total liabilities and shareholders' equity $910,000 Transactions during 2021 (current year) were as follows: $1,000,000 980,000 520,000 530,000 470,000 360,000 14,000 1. Sales to customers on account 2. Cash collected from customers 3. Purchase of merchandise on account Cash payment to suppliers Cost of merchandise sold 4. 5. Cash paid for operating expenses Cash paid for interest on notes 6. 7.

Answer rating: 100% (QA)

Nno of year is 3 years taken loan is repaying 3 yeas equ... View the full answer