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Replacement Decision

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Department
Finance
Course
MGFB10H3
Professor
Daga
Semester
Winter

Description
Mini Case Replacement DecisionFollowing a significant increase in the number of users Freelancercom network engineers have expressed their interest in upgrading the firms data network infrastructure and the related software at the firms headquarters The CEO recognizes that such decisions of modernization and replacement may be crucial to an organization that does most of its business online but in the same time he doesnt want to rush and wants the decision to be rational and based on facts He knows that engineers may often be overenthusiastic in purchasing and testing new equipment so he assigns Thomas to provide an analysis of the replacement of the network infrastructureThe present equipment including servers switches and routers can be sold for 150000 and the new equipment to replace it could be purchased for 500000 The replacement would reduce the network maintenance cost by 100000 per year for the next five years at the end of which it could be sold for 150000 However it will also imply an additional training cost of 40000 at the time of the purchase Thomas decided to add t
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