The following data applies to a New System to be implemented in a company: Investment cost in n = 0: $ 5,000
Investment cost in n = 1: $ 15,000
Shelf life: 10 years
Residual value (at the end of 11 years): $ 5,000
Annual income: $ 10,000 per year
Annual expenses: $ 2,000 per year
MARR: 8 %
Note: The first income and expenses will occur at the end of year 2.
Requirements:
A. Determine the conventional payback period
B. Determine the discounted payback period