Your engineering design firm is thinking about upgrading its server. there are two alternatives available: system 1 has an initial cost of $150,000 while system 2 costs $450,000. system 1 needs replacement in 5 years at the same cost and has a salvage value of $20,000, while system 2 needs replacement every 10 years and has a salvage value of $10,000. the estimated benefits from system 1 for the first 2 years is $20,000 per year and $ 40,000 per year for the last 3 years of its 5 year lifetime. benefits from system 2 are $70,000 per year over the ten year period. the firm is using an interest rate of 12%. a. which system should the company purchase according to present worth analysis? b. which system should you pick according to annual cash flow analysis? c. assuming that you’ll need these systems only for a project that will be finished in 18 years, given the following market values, which system will you pick?

Milden company has an exclusive franchise to purchase a product from the manufacturer and distribute it on the retail level. as an aid in planning, the company has decided to start using a contribution format income statement. to have data to prepare such a statement, the company has analyzed its expenses and has developed the following cost formulas: cost cost formula cost of good sold $35 per unit sold advertising expense $210,000 per quarter sales commissions 6% of sales shipping expense ? administrative salaries $145,000 per quarter insurance expense $9,000 per quarter depreciation expense $76,000 per quarter management has concluded that shipping expense is a mixed cost, containing both variable and fixed cost elements. units sold and the related shipping expense over the last eight quarters follow: quarter units sold shipping expense year 1: first 10,000 $ 119,000 second 16,000 $ 175,000 third 18,000 $ 190,000 fourth 15,000 $ 164,000 year 2: first 11,000 $ 130,000 second 17,000 $ 185,000 third 20,000 $ 210,000 fourth 13,000 $ 147,000 milden company’s president would like a cost formula derived for shipping expense so that a budgeted contribution format income statement can be prepared for the next quarter. required: 1. using the high-low method, estimate a cost formula for shipping expe