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ch Pizza Hut is considering implementing a logistic supply chain management system to support the daily food supply operations in Bahrain. The management system has an installation cost of $150,000. The annual software maintenance cost is $5,000 for the first 4 years, and $8,000 thereafter. In addition, there is expected to be a major upgrade cost of $15,000 every 15 years. The manager of Pizza Hut wants to know the Total Annual Equivalent Cost of the management system, if it will be used for the indefinite future. Assume 5% interest rate per year.

ch Pizza Hut is considering implementing a logistic supply chain management system to support the daily food supply operations in Bahrain. The management system has an installation cost of $150,000. The annual software maintenance cost is $5,000 for the first 4 years, and $8,000 thereafter. In addition, there is expected to be a major upgrade cost of $15,000 every 15 years. The manager of Pizza Hut wants to know the Total Annual Equivalent Cost of the management system, if it will be used for the indefinite future. Assume 5% interest rate per year.

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
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Q2) Pizza Hut is considering implementing a logistic supply chain management system to support the daily food supply operations in Bahrain. The management system has an installation cost of $150,000. The annual software maintenance cost is $5,000 for the first 4 years, and $8,000 thereafter. In addition, there is expected to be a major upgrade cost of $15,000 every 15 years. The manager of Pizza Hut wants to know the Total Annual Equivalent Cost of the management system, if it will be used for the indefinite future. Assume 5% interest rate per year.
Transcribed Image Text:Q2) Pizza Hut is considering implementing a logistic supply chain management system to support the daily food supply operations in Bahrain. The management system has an installation cost of $150,000. The annual software maintenance cost is $5,000 for the first 4 years, and $8,000 thereafter. In addition, there is expected to be a major upgrade cost of $15,000 every 15 years. The manager of Pizza Hut wants to know the Total Annual Equivalent Cost of the management system, if it will be used for the indefinite future. Assume 5% interest rate per year.
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