A dynamometer test lab currently has 45 computers with 20 printers. The computers cost $3,500 each...

A dynamometer test lab currently has 45 computers with 20 printers. The computers cost $3,500 each and the printers were $350 each when purchased 2 years ago. The market value of the computers is estimated at $750 each today and the printers $75 each today. It is expected that the current equipment will last another 4 years and have no salvage value at that time. Operating expenses are $350 for each computer and $150 for each printer per year.

A new networked system is being considered that would have 45 terminal with a cost of $2.500 each; 7 printers would be purchased at $1000 each. The life of the new system is 6 years with a salvage value of $500 for the terminals and $400 for the printers at the end of that time. Operating expenses for the networked system are $6,000 per year.

A) What are the sunk costs at this point? (5 points)

B) If the firm desires a 15% IRR, determine the best alternative. (20 points)

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ekkarill92 answered 3 months ago

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