Kermit is considering purchasing a new computer system. The purchase price is $138,433. 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 andhas a salvage value of $8,975 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 $73,169 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?Enter your answer in this format: 12345

Net present worth estimates the present value of the future cash flows that are to result during a…

Answered: alvage value of $8.975 at that time.…

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Economics

alvage value of $8.975 at that time. Over the 5-yearp our answer in this format: 12345

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Kermit is considering purchasing a new computer system. The purchase price is $138,433. 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 $8,975 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 $73,169 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?
Enter your answer in this format: 12345

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