### Free Educational Resources

• > A company must install a new \$1.5 million compu...
+

# A company must install a new \$1.5 million computer

##### Rating:
(0)
Author: sweeden jorgh
##### Description:

A company must install a new \$1.5 million computer to track patient records in its multiple service areas

http://hwpool.com/product/company-must-install-new-1-5-million-computer-track-patient-records-multiple-service-areas/

A company must install a new \$1.5 million computer to track patient records in its multiple service areas. It plans to use the computer for only three years, at which time a brand new system will be acquired that will handle both billing and patient records. The company can obtain a 10 percent bank loan to buy the computer or it can lease the computer for three years. Assume that the following facts apply to the decision:

The computer falls into the three-year class for tax depreciation, so the MACRS allowances are 0.33, 0.45, 0.15, and 0.07 in Years 1 through 4, respectively.

The company’s marginal tax rate is 34 percent.

Tentative lease terms call for payments of \$500,000 at the end of each year.

The best estimate for the value of the computer after three years of wear and tear is \$500,000.

What are the NAL and IRR of the lease? Should the computer system be purchased?

I need the answer in excel format.

(more)

### Analyze this: Our Intro to Psych Course is only \$329.

Sophia college courses cost up to 80% less than traditional courses*. Start a free trial now.

Tutorial