Answered: three county judges agreed to purchase…

three county judges agreed to purchase the software system. If the new system will be used for the indefinite future, find the equivalent value (a) now and (b) for each year hereafter.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The property appraisal district for Marin County has just installed new software
to track residential market values for property tax computations. The manager
wants to know the total equivalent cost of all future costs incurred when the
three county judges agreed to purchase the software system. If the new system
will be used for the indefinite future, find the equivalent value (a) now and
(b) for each year hereafter.
The system has an installed cost of $150,000 and an additional cost of
$50.000 after 10 years. The annual software maintenance contract cost is $5000
for the first 4 years and $8000 thereafter. In addition, there is expected to be a
recurring major upgrade cost of $15,000 every 13 years. Assume that = 5%
per year for county funds.

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Step 2: Calculation of Equivalent Value Now(Present Value)

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Step 3: Part (a) Equivalent Value Now

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Step 4: Part (b) Equivalent value for every year

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