Finance Assignment | Professional Writing
A relative of the manager suggests her an offer of a well-known brand:
Pricing at $300,000, it would generate an income of ($90,000) annually. The offer includes the first-year maintenance service free of charge. So, the first annual maintenance service charge of $30,000 would be payable at the beginning of the second year. Its life span can last for 6 years. The salvage value would be ($3,000).
Draw a cash flow diagram for the offer and If the MARR is 10%, should this offer be chosen? Why? Also to save some money, you suggest the manager to seek for third party maintenance service instead of the original manufacturer at the beginning of the second year, which charges $20,000 annually. How would this suggestion influence the manager’s decision? (50 marks)
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