economics question benefits and costs

Feb 24th, 2015
Price: $5 USD

Question description

1.  The manager of a movie production company is thinking of investing in new graphics computers for a price of $325,000.  The computers are expected to have a useful life of 3 years.  The machine is expected to save the firm $200,000 in the first year, $180,000 in the second year, and $60,000 in the third year.  At the end of 3 years, a junk dealer would be willing to purchase the machine for $20,000.  Alternatively, the manager could skip the machine, and invest the $325,000 at a guaranteed interest rate of 5%.  Which choice is more profitable for the manager, buying the computers or investing the money at 5%?

Tutor Answer

(Top Tutor) Studypool Tutor
School: Boston College

Studypool has helped 1,244,100 students

Review from student
Studypool Student
" Thanks, good work "
Ask your homework questions. Receive quality answers!

Type your question here (or upload an image)

1828 tutors are online

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors