Software Inc. is considering the purchase of new computerequipment totaling $150,000 with an estimated salvage value of$25,000 after three years. Maintenance, repairs, supplies, andother operating costs are estimated to be $13,000 per year.Determine the following:
- The annual cost based on the depreciation.
- The annual cost using a desired ROI of 15%.
- If the funds to purchase the equipment are borrowed at a rateof 8% for three years, what is the effect on the annual costs?
- What is the annual cost if the equipment is purchased frominternal funds, and it is sold for $40,000 after two years?
