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C. Wren Designs is considering the purchase of a new computer-aided drafting station to assist...

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Accounting

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C. Wren Designs is considering the purchase of a new computer-aided drafting station to assist in the preparation of architectural plans. The company's current system is ten years old and has begun to crash at least once a day. The new system has a purchase price of $12,171 and will save the company $2,500 per year in operating expenses. The system is expected to last 7 years. Wren estimates its cost of capital to be 8%. (Use the table in Appendix 9-2 to answer this question.) Click here to view the factor table. (a) What is the net present value of the new computer-aided drafting station? (Round answer to 2 decimal places, e.g. 5.25.) Net Present Value $ Based on net present value, should Wren purchase the new system? (b) What is the new system's internal rate of return? Internal Rate Of Return = % Based on the internal rate of return, should Wren purchase the new system?

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