Kermit is considering purchasing a new computer system. The purchase price is $146586. 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 $8420 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 $63835 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?