The 4 canon operators are paid 840 an hour each they work a

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Reference no: EM13577967

The Lansing Community College registrar's office is considering replacing some Canon copiers with faster copiers purchased from Kodak.The office's 4 Canon machines are expected to last 5 more years. They can each be sold immediately for $1,200; their resale value in 5 years will be zero. The total cost of the new Kodak equipment will be $113,000; the equipment will have a life of 5 years and a total disposal value at that time of $1,900

The 4 Canon operators are paid $8.40 an hour each. They work a 40-hour week and 51 weeks a year. The machines break down periodically, resulting in annual repair costs of $1,200 for each machine. Supplies cost $1,080 a year for each machine.

The Kodak system will require only 2 regular operators to do the same work. Kodak has offered the college a maintenance contract that covers all machine breakdowns; the cost of the contract is $780 per year. Total cost for all supplies will be $3,360 per year.

Required
Assuming a discount rate of 12%, compute the difference between the net present value if the registrar's office keeps the Canon copiers and the net present value if it buys the Kodak copiers.

Reference no: EM13577967

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