The IT department of a health center is faced with the opportunity to replace its current system of telephone control, which has a commercial value of $45,000 if it is immediately withdrawn. Information Additional shows that its current book value is $12,500. The new computerized system control has a total purchase cost of $450,000 with a useful life of 10 years, however, its category They classify it as an asset with an accounting life of 9 years to be depreciated using the depreciation method. maximum percentage The operating cost of the new system is estimated at $40,000 for the first 5 years, to
then increase at a rate of 10% per year for the rest of its useful life, i.e. the operating costs of year 6 are equal to $44,000, those for year 7 are $48,400, and so on until the end of year 10. At the same time, the system will report an additional income of $215,000 per year throughout its useful life.

-Determine the Annual Equivalent Value (EVA) of the project if we consider a planning horizon of 6 years within which the company estimates an effective tax rate on an operating income of 25%. Consider that the system can be liquidated in the market at $135,200 at the end of year 6 and the MARR of the organization is equal to 10% per year effective.

Answer rating: 100% (QA)

ANS WER The annual equivalent value of the project is 132 714 29 WORK ING 1 ... View the full answer