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Your company wants to purchase computerized milling equipment from XYZ, Inc. The contract being negotiated called for your company to purchase the equipment and software for $1,000,000 today, and spend an additional $4,000/year, for nine years, for softwar licensing and upgrades. In the middle of the negotiations, XYZ is purchased by ABC, Inc. ABC wants to change the contract to $1,000,000 purchase price, and $3,500 year 1, increasing by 5% per year through year 9, for software licensing and upgrades. If your company's MARR is 15%, what is the difference in the present value between the two offers? O a. $300 O b. answer not given Oc. $500 O d. $600 Oe. $400

Your company wants to purchase computerized milling equipment from XYZ, Inc. The contract being negotiated called for your company to purchase the equipment and software for $1,000,000 today, and spend an additional $4,000/year, for nine years, for softwar licensing and upgrades. In the middle of the negotiations, XYZ is purchased by ABC, Inc. ABC wants to change the contract to $1,000,000 purchase price, and $3,500 year 1, increasing by 5% per year through year 9, for software licensing and upgrades. If your company's MARR is 15%, what is the difference in the present value between the two offers? O a. $300 O b. answer not given Oc. $500 O d. $600 Oe. $400

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Your company wants to purchase computerized milling equipment from XYZ, Inc. The contract being negotiated called for your company to purchase the equipment and software for $1,000,000 today, and spend an additional $4,000/year, for nine years, for software licensing and upgrades. In the middle of the negotiations, XYZ is purchased by ABC, Inc. ABC wants to change the contract to $1,000,000 purchase price, and $3,500 year 1, increasing by 5% per year through year 9, for software licensing and upgrades. If your company's MARR is 15%, what is the difference in the present value between the two offers? O a. $300 O b. answer not given O c. $500 O d. $600 O e. $400
Transcribed Image Text:Your company wants to purchase computerized milling equipment from XYZ, Inc. The contract being negotiated called for your company to purchase the equipment and software for $1,000,000 today, and spend an additional $4,000/year, for nine years, for software licensing and upgrades. In the middle of the negotiations, XYZ is purchased by ABC, Inc. ABC wants to change the contract to $1,000,000 purchase price, and $3,500 year 1, increasing by 5% per year through year 9, for software licensing and upgrades. If your company's MARR is 15%, what is the difference in the present value between the two offers? O a. $300 O b. answer not given O c. $500 O d. $600 O e. $400
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