Calculating Present & Future Worth of Computer System Investment

[turkcyclone]

Homework Statement

A local business is going to purchase a computer system which consists of:
*10 computers @ $2,500.00 each
*1 network server @ $5,000.00
* Hardware and software required for each computer : $500.00 per
workstation
* Upgrades, maintenance: $50.00/month
* At the end of three years the network will be replaced and $10,000.00
salvage for the old system will be used toward replacement of the new
system
Assume: an annual interest rate of 7%
Calculate the present worth, the future worth and the annual equivalent worth of the
system.

Homework Equations

I already used the future and present worth formulas.

The Attempt at a Solution

I found total present worth to be: $44,737.57 and future worth to be: $54,805.45.


I understand how to find the future worth and present worth but I am really confused with finding the equivalent annual worth. I understand that this is when you a series of equal payments at regular intervals, but what are the regular intervals? Do I just divide the principle by 3 for the years? Also what formula should I be using, there are some different ones in my book.

I tried reading my engineering book but I can't figure out which technique to use. If someone could help me get started that would be great!

Also the next section asks me: The Internal Rate of Return (IRR) on an investment is the interest rate that makes a net present value = 0. Determine the IRR for the investment described in problem 1. Can someone help me get started because I can't find IRR in my notes or in the book.

Thanks for your help!

 

[turkcyclone]

Sorry I couldn't find the edit button, but I emailed my professor and got the help I needed. So I don't need the help anymore, but thanks for reading the post!