Problem: A manager of the Administrative Computer Center of Olympia State University is contemplating acquiring 120 computers. The computers will cost $325,000 cash, have zero terminal salvage value, and useful life of three years. Annual cash savings from operations will be $150,000. The required rate of return is 14%. There are no taxes.
1. Compute the net present value.
2. Should the Computer Center acquire the computers? Explain.