Determine the net present worth for new computer


Kermit is considering purchasing a new computer system. The purchase price is $129,090. Kermit will borrow one-fourth of the purchase price from a bank at 10 percent per year compounded annually. The computer system is expected to last 5 years and has a salvage value of $7,841 at that time. The loan is to be repaid using equal annual payments over a 3-year period.  Kermit expects to pay a technician $20,000 per year to maintain the system but will save $69,167 per year through increased efficiencies over the 5-year period. Kermit uses a MARR of 12 percent to evaluate investments. Determine the net present worth for this new computer system?

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Macroeconomics: Determine the net present worth for new computer
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