Golden Opportunities, a not-for-profit community association, is considering the proposed acquisition of a new training...
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Golden Opportunities, a not-for-profit community association, is considering the proposed acquisition of a new training and education software system. The price of the software system is $750,000, and it has a life expectancy of 5 years. The system will be sold at the end of the life span, with salvage value of $250,000. While this new system will have no impact on the number of training sessions or reimbursement, it is however expected to save the association $5,000 per year in operating costs. On average, the instructors train 25 people per day for 265 days per year. Training materials cost approximately $15 per person. Grant funding provides reimbursement of $75 for each person registered for training. Year one expenses include instructor labor ($75,000), building operations (rent and utilities of $40,000 and $20,000 respectively), and overhead of $5,000. Costs increase by 5% annually. Revenues increase by 7% annually. The cost of capital is 12%.
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