Answer the question and explain how to set up in excel. Chapter 16 - Computer Assignment
Randall UPS is a supplier of a variety of services for small businesses. Commercial printer, scanning, and copier equipment is being considered to replace a five-year-old machine. After the initial screening of a variety of systems, two integrated systems remain as potential replacements - a new model from Konica Minolta and an updated and enhanced reconstructed model from Ricoh. The relevant information on the two machines are as follows:
Konica Minolta
Ricoh
Installed Price
$24,500
$25,500
Estimated costs
$4,300 plus $0.015/copy
$7,050
Estimated salvage value
$10,500
$12,500
Estimated useful life
5 years
5 years
Randall expects to charge customers $0.06 per copy and sell 250,000 copies annually; however, they are uncertain about their service volume estimate. The $0.06 per copy they expect to charge customers and the maintenance & usage fees are not expected to change over the next five years. Randall requires a minimum pre-tax rate of return of 15% on its equipment investments.
REQUIREMENTS
Using the NPV function in Excel determine the Net Present Value (NPV) for the Konica Minolta system for estimated volumes starting from 200,000 copies/year to 300,000 copies/year, in increments of 5,000 copies.
Using the NPV function in Excel determine the (NPV) for the Ricoh system for estimated volumes starting from 200,000 copies/year to 300,000 copies/year, in increments of 5,000 copies.
From your answers to the above, determine which copier you would recommend to Speedy at an annual volume of 2100,000, 240,000, & 280,000 copies
Explain why the decision is different at different volumes.