graytyl1
Nov 11, 2012, 09:54 PM
The Lansing Community College registrar's office is considering replacing some Canon copiers with faster copiers purchased from Kodak.
The office's 4 Canon machines are expected to last 4 more years. They can each be sold immediately for $1,500; their resale value in 4 years will be zero. The total cost of the new Kodak equipment will be $114,000; the equipment will have a life of 4 years and a total disposal value at that time of $1,700.
The 4 Canon operators are paid $8.50 an hour each. They work a 39-hour week and 50 weeks a year. The machines break down periodically, resulting in annual repair costs of $1,020 for each machine. Supplies cost $1,200 a year for each Canon copier.
The Kodak system will require only 2 regular operators. Kodak has offered the college a maintenance contract that covers all machine breakdowns; the cost of the contract is $1,080 per year. Total cost for all supplies will be $270 per month.
Assuming a discount rate of 6%, what is the net present value if Lansing keeps the Canon copiers?
Assuming a discount rate of 6%, what is the net present value if Lansing buy the Kodak copiers?
The office's 4 Canon machines are expected to last 4 more years. They can each be sold immediately for $1,500; their resale value in 4 years will be zero. The total cost of the new Kodak equipment will be $114,000; the equipment will have a life of 4 years and a total disposal value at that time of $1,700.
The 4 Canon operators are paid $8.50 an hour each. They work a 39-hour week and 50 weeks a year. The machines break down periodically, resulting in annual repair costs of $1,020 for each machine. Supplies cost $1,200 a year for each Canon copier.
The Kodak system will require only 2 regular operators. Kodak has offered the college a maintenance contract that covers all machine breakdowns; the cost of the contract is $1,080 per year. Total cost for all supplies will be $270 per month.
Assuming a discount rate of 6%, what is the net present value if Lansing keeps the Canon copiers?
Assuming a discount rate of 6%, what is the net present value if Lansing buy the Kodak copiers?