Business Driven Technology 6th Edition by Paige Baltzan

Exercise 102

Cost Comparison
You are thinking about purchasing a new computer because the machine you are using now is four years old, slow, not always reliable, and does not support the latest operating system. Your needs for the new computer are simple: anti-virus software, email, web browsing, word processing, spreadsheet, database, iTunes, and some lightweight graphical tools. Your concern is what the total cost of ownership will be for the next three years. You have to factor in a few added costs beyond just the initial purchase price for the computer itself, such as: added hardware (this could include a new printer, docking station, or scanner), software (purchase of a new operating system), training (you're thinking about pursuing web training to get an internship next term), subsequent software upgrades, and maintenance.
Project Focus
It is useful to think about costs over time-both direct as well as indirect costs. Part of the reason this distinction is important is that a decision should rest not on the nominal sum of the purchase, but rather on the present value of the purchase.
A dollar today is worth more than a dollar one year from now.
The relevant discount rate (interest rate) is your marginal cost of capital corresponding to a level of risk equal with the purchase.
Use the data file AYK6_Data.xlsx as a template.
Data File: AYK6_Data.xlsx