Answers: Investing in X100 Server

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ANSWER 1 A. Susan should invest in X100 server initially because it costs almost half compared to the other choice she has. This means that she can significantly improve her chance of profits in the first two years. For example if she expects to gain 400 customers in the first year, this would mean that revenue generated from subscriber fee alone would be $8000. The following year if she is able to attract 300 more customers she would have a total of 700 customers and hence revenue generated would be $14,000. This means that she would be able to recover the money spent on server within 2 years of operations. But if she chooses to take X120 server instead, it would take her few more years to reach the break-even point. B. If the prices of XENTEC servers are likely to drop from $14,000 to around $5,000 in one year, Susan would be wise to wait for one year. But she must not choose this option if she wants superior service with no server hanging issues. In other words, the used servers may not work as well as a new one, and with used server can the problem of hanging, extra maintenance, heat etc. these factors alone can cause major frustration and may cut into her profits seriously. Thus it may not be wise to buy a used server if she has any doubts about its performance. She should then opt for a new X100. However if money concerns are serious and she has no doubts regarding performance, then its best that she wait one year and then spend far less and make much higher

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