Question: Shyster, Shyster, Shyster, and Prevaricator, a Tampa law firm, is considering developing a small local area network to tie together all its computers. The consultants have determined that two different configurations can meet the firm’s needs. Economically speaking, which LAN configuration should SSSP purchase? Use Present Worth Analysis in determining your answer. SSSP has an MARR of 15%.

Configuration A Configuration B

Initial Cost $95,000 $80,000

Installation Cost 4,000 4,000

Annual Operating Cost 3,500 5,500

Salvage Value 12,000 8,000

Estimated Useful Life 7 years 5 years