please explain step by steps 7. A private hospital plans to replace its manual t

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please explain step by steps

7. A private hospital plans to replace its manual telephone answering system with an automated one. Currently 5 people (2 on first shift, 2 on second, and one on third) answer telephones. Their annual wages e $31,250 per person. Operating and maintenance of the new automated system will be 6.5% of the first cost of the system. The income tax rate is 40% and straight line depreciation will be used over a 15 year life with no salvage. The hospital uses a MARR of 8%. How much can be spent on the new system? ANS.___________

Explanation / Answer

The maximum amount can be spent for the purchase of machine will be equal to present equivalent of the annual amount of wages less reduced by operating and maintenance cost of new machine. Let

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