Purchase a new computer system for $45,000. The system is expected to last 6 years with a salvage value of $7,000. Lease a new computer system for $9,000 per year, payable in advance (at the start of the year). The system should last for 6 years. If a MARR of 6% is used, which alternative should be selected using a net present worth analysis? Which alternative would you select using an annualized cost method of analysis?
Purchase a new computer system for $45,000. The system is expected to last 6 years with a salvage value of $7,000. Lease a new computer system for $9,000 per year, payable in advance (at the start of the year). The system should last for 6 years. If a MARR of 6% is used, which alternative should be selected using a net present worth analysis? Which alternative would you select using an annualized cost method of analysis?
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 10P
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- A contractor is considering the following two alternatives:
- Purchase a new computer system for $45,000. The system is expected to last 6 years with a salvage value of $7,000.
- Lease a new computer system for $9,000 per year, payable in advance (at the start of the year). The system should last for 6 years.
- If a MARR of 6% is used, which alternative should be selected using a net present worth analysis?
- Which alternative would you select using an annualized cost method of analysis?
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