a small movie production company that currently uses APS-C sized (Advanced Photo

Question

a small movie production company that currently uses APS-C sized (Advanced Photo System type-C: 1.6 Crop Factor) image processing sensors to install on its to the use fuil-trame (3Smm-sized) digtal sensors. The board of directors concurs with Aaron to make the switch to Mul-ftrame sensors due to their higher as to pr if the com that the shutter life of full-frame sensors is 7 years with no salvage value. Two suppliers are of interest: Waard ?% will provide the sensors an 4 beginning-of-year annual payments of $3600 each. On the other hand, Putiyon, inc. will provide the sensors for an up-front payment of $12250. If the MARR is 8, which be

Explanation / Answer

Time = 7 years

R = 8%

If Willard Inc. is considered:

NPV = present value of the savings – present value of the investment

NPV = 4000*(1-1/1.08^7)/.08 - (3600 + 3600/1.08 + 3600/1.08^2 + 3600/1.08^3)

NPV =$7947.93

Here, PV of the cost = $12877.55

If Putlyon Inc. is considered:

NPV = present value of the savings – present value of the investment

NPV = 4000*(1-1/1.08^7)/.08 - 12250

NPV = $8575.48

Here, the NPV of the device purchased from Putlyon Inc. is relatively higher and it is $8575.48, so it should be selected for purchase.

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