If the digital system has a life of ten years and a salvage

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Reference no: EM1383240

A movie theatre is considering the purchase of a new digital projection system ( each showing is as perfect as when it was first filmed). The new ticket price per person would be $ 9.00, which is $ 0.80 higher than for the traditional cellulose film projection system. The new projection system would cost $ 60,000. ( 6.4) a. If the theatre expects to sell 18,000 tickets per year, how many years ( as an integer) will it take for the theatre to recover the $ 60,000 investment of the new system ( i. e., what is the simple payback period)? b. What is the discounted payback period ( as an integer) if MARR is 15% per year? c. If the digital system has a life of ten years and a salvage value of $ 10,000 at that time, what is the IRR of the new system? Should this project be undertaken? (Cite the Appropriate Decision rule.)

Reference no: EM1383240

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