A Local Learning Center Is Considering Replacing the Computers in Its

question 28

Essay

A local learning center is considering replacing the computers in its facility with thin client technology,thereby eliminating the need for individual computers at each station in the lab.The cost to purchase and install this new technology is $450,000 and it is projected to last for six years.The existing computers have a book value of $70,000 and a market value of $18,000 if they were to be sold.They expect to save a fair amount of money in maintenance costs and software upgrades if they go to the new technology.
Required:
a.What would the annual savings have to be in order to warrant the replacement of the existing computers with the thin client technology?
b.What would the annual savings have to be in order to warrant the replacement of the existing computers with the thin client technology if the existing computers have no current market value?

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Definitions:

Protection

The practice of shielding a sector of the economy from foreign competition.

General Agreement on Tariffs and Trade

An international treaty aimed at promoting international trade by reducing or eliminating trade barriers such as tariffs and quotas; it was replaced by the World Trade Organization (WTO) in 1995.

Voluntary Export Restraint

A self-imposed limitation by exporting countries on the volume of their exports of a particular good.

Subsidy

A financial contribution granted by a government or another entity to support an industry, business, or individual, usually intended to keep prices low, support an essential service, or encourage activities beneficial to the public interest.