Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. unfortunately, obsolete technologies business is s

Unfortunately, Obsolete Technologies business is shrinking as the company dithers and dawdles. Its chief financial...

80.2K

Verified Solution

Question

Finance

imageUnfortunately, Obsolete Technologies business is shrinking as the company dithers and dawdles. Its chief financial officer realizes that the savings from installing the new computer will likewise shrink by $4,000 per year, from a present value of $70,000 now, to $66,000 next year, then to $62,000, and so on. Redo Table 8.2with this new information. When should Obsolete buy the new computer?

Year of Purchase

Cost of Computer PV Savings

NPV at Year of Purchase ( r = 10%) NPV Today 0 $50 $70 $20 $20.0 1 45 70 25 22.7 2 40 70 30 24.8 3 36 70 34 25.5 optimal purchase date 4 33 70 37 25.3 5 31 70 39 24.2 TABLE

TABLE 8.2 Obsolete Technologies: The gain from purchase of a computer is rising, but the NPV today is highest if the computer is purchased in year 3 (dollar values in thousands) Year of Purchase Cost of Computer $50 45 40 36 Pv Savings $70 70 70 70 70 70 NPV at Year of Purchase (r-10%) $20 25 30 34 37 39 NPV Today $20.0 22.7 24.8 25.5 25.3 24.2 2 3 4 optimal purchase date 31

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Psychology
1.2K views

Evaluate the following case using a) Kant’s theory and b) Utilitarianism. Then, c) provide an overall...

Accounting
1.2K views

Financial Statements The following amounts were taken from the accounting records of Padget Home Services, Inc., as...

Biology
1.2K views

Respiratory syncytial virusSelect one:a. causes serious disease in infants 6 months old or younger.b. uses...

Biology
1.2K views

What poetic device does Dickinson use in the following excerpt of Heart We Will Forget...

Calculus
1.2K views

Click here to watch the video Write tan 0 in terms of sec 0 if...

Accounting
1.2K views

Requirement 1. What is the variable utilities cost per machine hour? Let's begin...

Accounting
1.2K views

How can businesses avoid being trapped in outdated strategies? Please give examples

Accounting
1.2K views

Using accrual accounting, expenses are recorded and reported only a.when they are incurred, whether or...

Accounting
1.2K views

Recording Bonds Issued at a Premium Straight-Line Yale Corporation issued to Zap Corporation $60,000, 8%...

Accounting
1.2K views

show work please Problem 1: Internet Consulting Services Ine adjusts monthlys...

Finance
1.2K views

= Quiz: Chapter 9 Quiz Question 6 This Quiz: 13 pts possible Submit Quiz Markov...

Finance
1.2K views

This is my home work any help please? APOSLE 1. Compute the yield to...