Answer:
The maximum amount that should be spent on the upgrade is $38,298,000.
Step-by-step explanation:
Let the initial purchase be <em>x</em>.
The ROI = 15% of <em>x</em> = 0.15<em>x</em>
At the end of 4 years, salvage value = 10% of <em>x</em> = 0.1<em>x</em>
<em />
Current income per day = $16 × 230 = $3680
Expected income per day = $21 × 245 = $5145
Increase in income per day = $5145 - $3680 = $1465
For 4 years (assuming a year is 365 days),
Increase in income = $1465 × 365 × 4 = $2138900
Maintenance and utility cost for 4 years = 4 × $56000 = $224000
At the end of 4 years,
ROI = $2138900 + salvage value = $2138900 + 0.1<em>x</em> - $224000
0.15<em>x</em> = $1914900 + 0.1<em>x</em>
0.05<em>x</em> = $1914900
<em>x</em> = $38298000
