Business Data Analysis
The idea of buying a new PC machine to replace the older one arose at the last management team meeting. The older one would not be sold but could be used as backup if necessary.
If SMO does decide to replace the older machines and buy new ones, the finance dept has indicated that the maximum monthly payment they could afford, based on current profit forecasts for the next six years, would be £2000 p.m. The Company’s bankers would be able to offer an interest rate of 4% to borrow the £95,000 cost of the new machine.
What range of months would you recommend that the loan is taken over to keep within SMO’s budget?