Business, 01.10.2019 00:10 jamayeah02

Your engineering design firm is thinking about upgrading its server. there are two alternatives available: system 1 has an initial cost of $150,000 while system 2 costs $450,000. system 1 needs replacement in 5 years at the same cost and has a salvage value of $20,000, while system 2 needs replacement every 10 years and has a salvage value of $10,000. the estimated benefits from system 1 for the first 2 years is $20,000 per year and $ 40,000 per year for the last 3 years of its 5 year lifetime. benefits from system 2 are $70,000 per year over the ten year period. the firm is using an interest rate of 12%. a. which system should the company purchase according to present worth analysis? b. which system should you pick according to annual cash flow analysis? c. assuming that you’ll need these systems only for a project that will be finished in 18 years, given the following market values, which system will you pick?

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Your engineering design firm is thinking about upgrading its server. there are two alternatives avai...

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