Allen College has a telephone system that is in poor condition. The system can be either overhauled or replaced with a new system. The following data have been gathered concerning these two alternatives: Allen College uses a 12% discount rate and the total cost approach to net present value analysis. Both alternatives are expected to have a useful life of eight years. The net present value of the alternative of replacing the present system with the proposed new system is closest to:
A)($233,300)
B)($283,300)
C)($263,100)
D)($273,100)

Question

Allen College has a telephone system that is in poor condition. The system can be either overhauled or replaced with a new system. The following data have been gathered concerning these two alternatives:  Allen College uses a 12% discount rate and the total cost approach to net present value analysis. Both alternatives are expected to have a useful life of eight years. The net present value of the alternative of replacing the present system with the proposed new system is closest to:
A)($233,300) 
B)($283,300) 
C)($263,100) 
D)($273,100)

Quizplus · Accepted Answer

The Answer of Allen College has a telephone system that is in poor condition. The system can be either overhauled or replaced with a new system. The following data have been gathered concerning these two alternatives:  Allen College uses a 12% discount rate and the total cost approach to net present value analysis. Both alternatives are expected to have a useful life of eight years. The net present value of the alternative of replacing the present system with the proposed new system is closest to:
A)($233,300) 
B)($283,300) 
C)($263,100) 
D)($273,100)

Allen College Has a Telephone System That Is in Poor