Interglobal Paper Company has asked for your help in comparing its present computer systems with a new one. Its board of directors would like to see implemented. Proposed system and present system costs are as follows: Item Year 1 Equipment Lease Salaries Overhead Development Year 2 Equipment Lease Salaries Overhead Development Year 3 Equipment Lease Salaries Overhead Development Year 4 Equipment Lease Salaries Overhead Development Proposed System Costs 20,000 30,000 4,000 30,000 20,000 33,000 4,400 12,000 20,000 36,000 4,900 10000 20,000 39,000 5,500 8,000 a. Graph the costs and show the break-even point. b. Explain your recommendation. Present System Costs 11,500 50,000 3,000 8,000 10,500 55,000 3,300 10,000 10,500 60,000 3,600 16,000 10,500 66,000 000 12,000

Interglobal Paper Company has asked for your help in comparing its present computer systems with a new one. Its board of directors would like to see implemented. Proposed system and present system costs are as follows: Item Year 1 Equipment Lease Salaries Overhead Development Year 2 Equipment Lease Salaries Overhead Development Year 3 Equipment Lease Salaries Overhead Development Year 4 Equipment Lease Salaries Overhead Development Proposed System Costs 20,000 30,000 4,000 30,000 20,000 33,000 4,400 12,000 20,000 36,000 4,900 10000 20,000 39,000 5,500 8,000 a. Graph the costs and show the break-even point. b. Explain your recommendation. Present System Costs 11,500 50,000 3,000 8,000 10,500 55,000 3,300 10,000 10,500 60,000 3,600 16,000 10,500 66,000 000 12,000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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