The Atlantic Medical Clinic can purchase a new computer system that will save $8

Question

The Atlantic Medical Clinic can purchase a new computer system that will save $8,000 annually in billing costs. The computer system will last for seven years and have no salvage value Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. Required What is the maximum price (i.e., the price that exactly equals the present value of the annual savings in billing costs) that the Atlantic Medical Clinic should be willing to pay for the new computer system if the clinic's required rate of return is: (Round your final answer to the nearest whole dollar amount.) Maximum Price 1. Nine percent 2. Twelve percent

Explanation / Answer

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. A B PVAF Annual Saving Maximum Price A*B 9% PVAF, 7 Years      5.0330 8000                             40,264 10% PVAF, 7 Years      4.8684 8000                             38,947

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