Accusoft Systems is offering small business owners a software package that keeps
ID: 1113572 • Letter: A
Question
Accusoft Systems is offering small business owners a software package that keeps track of many accounting functions from bank transactions to sales invoices. The site license will cost $45,000 to install and will require a fee of $2500 every 3 months. If your company can save $13,500 every quarter and have the security of managing its books in-house, how long will it take for you to recover the investment at an interest rate of 10% per quarter?
The time taken to recover the investment is determined to be quarters.
Explanation / Answer
0 = -45000 + (13500-2500)(P/A , 10%, n)
(P/A, 10%,n) = 45000/11000 = 4.09
So according to the compound table n is between 7 and 8 quarters.
if written in years terms, it is 1.875 years