None 1. A government agency must decide whether to buy a computer which costs $80,000. Themachine is likely to be obsolete at the end of three years, with no salvage value. During thoseyears it will return annual net benefits (i.e., benefits over and above operating expenses) of$40,000 at the end of the first year; $40,000 at the end of the second year; and $20,000 at the endof the third year.At a 5% discount rate, what is the present value of the net benefits? Should the agencybuy this computer?2. What is the present value of the net benefits of the computer in #1 if the discount rate is 10%?3. What is the present value of the net benefits of the computer in #1 if the discount rate is 15%?

To find the present value of the net benefits for each scenario, we can use the formula for…

Answered: 1. A government agency must decide…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter1: Introduction And Goals Of The Firm

Section: Chapter Questions

Problem 2.2CE

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