In: Economics
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.
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.