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In: Economics

How much money could Ted’s Sports Wear Company afford to spend on a new computerized order...

How much money could Ted’s Sports Wear Company afford to spend on a new computerized order management system if the system is expected to generate savings of $50,000 per year, and it will be used for the next 6 years? Assume an interest rate of 10% per year.

Solutions

Expert Solution

Savings per year = 50,000

Life = 6 years

Interest = 10%

How much the company afford to spend on new computerised management system?
Calculate Present Worth of the annual savings.

PW = 50,000 (P/A, 10%, 6)

PW = 50,000 (4.35526)

PW = 217,763

Tge company will afford to spend $217,763.

Rahul Sunny answered 2 years ago
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