Accusoft Systems is offering small business owners a software package that keeps

Question

Accusoft Systems is offering small business owners a software package that keeps track of many accounting functions from bank transactions to sales invoices. The site license will cost $51,000 to install and will require a fee of $6000 every 3 months. If your company can save $13,500 every quarter and have the security of managing its books in-house, how long will it take for you to recover the investment at an interest rate of 10% per quarter?

The time taken to recover the investment is determined to be quarters.

Explanation / Answer

Time taken to recover the investment is determined to be 5 quarters(15 months)

10% interest rate( 51000 x 10%)=5100

Site license, 51000(install)+6000(1st quarter)+6000(2nd quarter)+6000(3rd quarter)+6000(4th quarter)+6000(5th quarter)=81000

Company saving 13500+5100=18600(1st quarter)+18600(2nd quarter)+18600(3rd quarter)+18600(4th quarter)+18600(5th quarter)=93000

18600x5=93000(at end of 5th quarter)

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