A firm purchased a computer for 1500 EUR; the computer is used for 4 years and is then sold for 500 EUR. Annual disbursement for operating, maintenance, and software costs equals 500 EUR/year over the 4 – year period. The anual savings by using this computer is 1500 EUR/year. On the basis of a 10% MARR, determine if the decision to buy the analog computer was economically sound. Use the following measures of investment worth: a) Net Present Value (Present Worth); b) Internal Rate of Return (IRR); c) External Rate of Return (ERR); d) Simple Payback Period.
A firm purchased a computer for 1500 EUR; the computer is used for 4 years and is then sold for 500 EUR. Annual disbursement for operating, maintenance, and software costs equals 500 EUR/year over the 4 – year period. The anual savings by using this computer is 1500 EUR/year. On the basis of a 10% MARR, determine if the decision to buy the analog computer was economically sound. Use the following measures of investment worth: a) Net Present Value (Present Worth); b) Internal Rate of Return (IRR); c) External Rate of Return (ERR); d) Simple Payback Period.
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
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d) Simple Payback Period
I want the solution to part d please, i need to know the simple Payback period for this problem. thank you
Transcribed Image Text:A firm purchased a computer for 1500 EUR; the computer is used for 4 years and is then sold
for 500 EUR.
Annual disbursement for operating, maintenance, and software costs equals 500 EUR/year over
the 4 – year period.
The anual savings by using this computer is 1500 EUR/year.
On the basis of a 10% MARR, determine if the decision to buy the analog computer was
economically sound.
Use the following measures of investment worth:
a) Net Present Value (Present Worth);
b) Internal Rate of Return (IRR);
c) External Rate of Return (ERR);
d) Simple Payback Period.
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