A company is offered a new computer program that is supposed to provide savings in costs. The cost of the program and equipment is $274,000 and will have a useful life of 5 years and a salvage value of $59,000. The annual operating costs of the program will be $50,000 per year. In the 3rd year an upgrade is needed with a cost of $20,000 If the MARR of the company is 18%, how much must the annual equivalent savings in costs be, to justify the implementation of this program?
A company is offered a new computer program that is supposed to provide savings in costs. The cost of the program and equipment is $274,000 and will have a useful life of 5 years and a salvage value of $59,000. The annual operating costs of the program will be $50,000 per year. In the 3rd year an upgrade is needed with a cost of $20,000 If the MARR of the company is 18%, how much must the annual equivalent savings in costs be, to justify the implementation of this program?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A company is offered a new computer program that is supposed to provide savings in costs. The cost of the program and equipment is $274,000 and will have a useful life of 5 years and a salvage value of $59,000. The annual operating costs of the program will be $50,000 per year. In the 3rd year an upgrade is needed with a cost of $20,000 If the MARR of the company is 18%, how much must the annual equivalent savings in costs be, to justify the implementation of this program?
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