QUUr decision with only relevant numbers. Problem 15 Marita Lo desires to purchase a new front office computer system for her Lo Motel (LOMO). After considerable discussion with purveyors, she has narrowed her choices to systems sold by ABC Company and XYZ Computers. The system proposed by each company is expected to have a useful life of seven years. She believes the alternative systems are equívalent for providing services required by the LOMO; therefore, her focus is cost. The associated costs 0000 of each system are as follows: 334 Chapter 6 ABC XYZ 000.C db Computers Co. 002. 000 $25,000 $30,000 Initial cost Annual costs: 25,000 25,000 Labor 1,000 800 Utilities ips 2,000 2,000 Supplies Requred 3,000 2,500 Maintenance 1. Salvage value (in 7 years) 5,000 8,000 Required: molls rbee kat amoom 1. Which costs are irrelevant? 2. Which system should Marita purchase? (Ignore the time value of money.) Support your decision with numbers.

QUUr decision with only relevant numbers. Problem 15 Marita Lo desires to purchase a new front office computer system for her Lo Motel (LOMO). After considerable discussion with purveyors, she has narrowed her choices to systems sold by ABC Company and XYZ Computers. The system proposed by each company is expected to have a useful life of seven years. She believes the alternative systems are equívalent for providing services required by the LOMO; therefore, her focus is cost. The associated costs 0000 of each system are as follows: 334 Chapter 6 ABC XYZ 000.C db Computers Co. 002. 000 $25,000 $30,000 Initial cost Annual costs: 25,000 25,000 Labor 1,000 800 Utilities ips 2,000 2,000 Supplies Requred 3,000 2,500 Maintenance 1. Salvage value (in 7 years) 5,000 8,000 Required: molls rbee kat amoom 1. Which costs are irrelevant? 2. Which system should Marita purchase? (Ignore the time value of money.) Support your decision with numbers.

PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)

6th Edition

ISBN:9781337117005

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter7: Using Consumer Loans

Section: Chapter Questions

Problem 10FPE

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