Homework Help is Here – Start Your Trial Now!
Business
Finance
14. The mayor of Trenton is considering the purchase of a new computer system for the city's tax department. The system costs $84,000 and has an expected life of five years. The mayor estimates the following savings will result if the system is

14. The mayor of Trenton is considering the purchase of a new computer system for the city's tax department. The system costs $84,000 and has an expected life of five years. The mayor estimates the following savings will result if the system is

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
See similar textbooks
icon
Related questions
Question

Q-H

● 14. The mayor of Trenton is considering the purchase of a new computer system for the city's tax department. The system costs $84,000 and has an expected life of five years. The mayor estimates the following savings will result if the system is purchased: Year or Period ordinary annuity at 8% $ 29,000 0.926 1 2 34,000 0.857 1.783 3 39,000 0.794 2.577 24,000 0.735 3.312 4 5 21,000 0.681 3.993 Trenton uses a 8% discount rate for capital-budgeting decisions. $21,920. Savings PV of $1 at 8% PV of an A salesperson from a different computer company claims that his machine, which costs $94,000 and has an estimated service life of four years, will generate annual savings for the city of $35,000. If the discount rate is 8%, the net present value of this system would be: $28,655. $72,512. 0.926 $115,920. None of the answers is correct.
Transcribed Image Text:● 14. The mayor of Trenton is considering the purchase of a new computer system for the city's tax department. The system costs $84,000 and has an expected life of five years. The mayor estimates the following savings will result if the system is purchased: Year or Period ordinary annuity at 8% $ 29,000 0.926 1 2 34,000 0.857 1.783 3 39,000 0.794 2.577 24,000 0.735 3.312 4 5 21,000 0.681 3.993 Trenton uses a 8% discount rate for capital-budgeting decisions. $21,920. Savings PV of $1 at 8% PV of an A salesperson from a different computer company claims that his machine, which costs $94,000 and has an estimated service life of four years, will generate annual savings for the city of $35,000. If the discount rate is 8%, the net present value of this system would be: $28,655. $72,512. 0.926 $115,920. None of the answers is correct.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 1 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS