A computer system is to be acquired. The purchase price of the system has been quoted at $55,000, and the system will reduce annual expenses by $20,000 per year in real dollars. Historically, these annual expenses have increased at an average rate of 8% per year, and this is expected to continue into the future. Maintenance services will be contracted for, and their cost per year (in actual dollars) is constant at $3,500. Assume f = 8% per year, MARR = 25% per year (im).
What is the minimum (integer value) life of the system such that the new computer can be economically justified? The computer’s market value is zero at all times.