Answer
(a) investment is worthwhile
(b) $\$2708.50$
Work Step by Step
We are given: $$ r=0.08,\ \ \ \ t=5,\ \ \ P=7000$$
(a) Then $PV$ after $5$ years is
\begin{align*}
PV&= 7000\left( e^{-0.08(1)}+ e^{-0.08(2)}+ e^{-0.08(3)}+ e^{-0.08(4)}+ e^{-0.08(5)} \right)\\
& \approx 27708.50
\end{align*}
The reduced labor cost is bigger than the cost of the computer system. Hence, the investment is worthwhile.
(b) The amount of money the company will actually save is
$$ 27708.50- 25000=\$2708.50$$
