Westland College has a telephone system that is in poor condition. The system either can be overhauled or replaced with a new system. The following data have been gathered concerning these two alternatives: Westland College uses a 10% discount rate and the total cost approach to net present value analysis. The working capital required under the new system would be released for use elsewhere at the conclusion of the project. Both alternatives are expected to have a useful life of eight years. The net present value of overhauling the present system is closest to:
A)($321,084)
B)($532,516)
C)($560,536)
D)($592,516)

Question

Westland College has a telephone system that is in poor condition. The system either can be overhauled or replaced with a new system. The following data have been gathered concerning these two alternatives:  Westland College uses a 10% discount rate and the total cost approach to net present value analysis. The working capital required under the new system would be released for use elsewhere at the conclusion of the project. Both alternatives are expected to have a useful life of eight years. The net present value of overhauling the present system is closest to:
A)($321,084) 
B)($532,516) 
C)($560,536) 
D)($592,516)

Quizplus · Accepted Answer

The Answer of Westland College has a telephone system that is in poor condition. The system either can be overhauled or replaced with a new system. The following data have been gathered concerning these two alternatives:  Westland College uses a 10% discount rate and the total cost approach to net present value analysis. The working capital required under the new system would be released for use elsewhere at the conclusion of the project. Both alternatives are expected to have a useful life of eight years. The net present value of overhauling the present system is closest to:
A)($321,084) 
B)($532,516) 
C)($560,536) 
D)($592,516)

Westland College Has a Telephone System That Is in Poor