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MBA, Ph.D in Management
Harvard university
Feb-1997 - Aug-2003
Professor
Strayer University
Jan-2007 - Present
Q1 )A company is evaluating two different computer systems for purchase. The
company uses a MARR of 4% to evaluate investments. The information for the two
systems is in the following table:
First Cost
Annual Maintenance
Annual Cost Savings
Salvage Value
Expected Life A
$20,000
$5,000
$7,000
$1,300
3 years B
$10,000
$4,000
$5,000
$1,000
2 years 1) What is the annual worth of system A? 2) What is the annual worth of system B? 3) Based on present worth analysis, what is the present worth of system A?
Hints:
1. What do you need to consider when evaluating multiple alternatives using
present worth analysis?
2. How could you use the annual worth to easily calculate the present worth? 4) Based on present worth analysis, what is the present worth of system B?
Hints:
1. What do you need to consider when evaluating multiple alternatives using
present worth analysis?
2. How could you use the annual worth to easily calculate the present worth? Q2)
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