The Atlantic Medical Clinic can purchase a new computer syst

The Atlantic Medical Clinic can purchase a new computer system that will save $12,000 annually in billing costs. The computer system will last for ten years and have no salvage value. Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the appropriate discount factor(s) using tables. Required: Up to how much should the Atlantic Medical Clinic be willing to pay for the new computer system if the clinic’s required rate of return is: (Use the appropriate table to determine the discount factor(s).)

1. six percent

2. eight percent

Solution