Galvanized Products is considering purchasing a new computer system for their enterprise data management system. The vendor has quoted a purchase price of $100,000. Galvanized Products is planning to borrow one-fourth of the purchase price from a bank at 16% 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 $3,000 at that time. Over the 5-year period, Galvanized Products expects to pay a technician $20,000 per year to maintain
Galvanized Products is considering purchasing a new computer system for their enterprise data management system. The vendor has quoted a purchase price of $100,000. Galvanized Products is planning to borrow one-fourth of the purchase price from a bank at 16% 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 $3,000 at that time. Over the 5-year period, Galvanized Products expects to pay a technician $20,000 per year to maintain the system but will save $50,000 per year through increased efficiencies. Galvanized Products uses a MARR of 14%/year to evaluate investments. What is the external rate of
Found out that the answer for this is 14.57%. Just needed the detailed and clear solution. Thank you!
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