St. Lucia Foods wants to introduce a new computer system for its perishable products warehouse. The costs and benefits are as follows:
|
Year
|
Costs
|
Benefits
|
|
1
|
$33,00
|
$21,00
|
|
2
|
$34,600
|
$26,200
|
|
3
|
$36,300
|
$32,700
|
|
4
|
$38,100
|
$40,800
|
|
5
|
$40,000
|
$51,000
|
|
6
|
$42,000
|
$63,700
|
a. Given a discount rate of 8 percent (.08), perform present value analysis on the data for St. Lucia. (Use this formula
To find the multipliers for years 1 to 6.)
b. What is your recommendation for St. Lucia Foods?.