(Ignore income taxes in this problem.) 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 capital budgeting analysis. Both alternatives are expected to have a useful life of eight years. The net present value of the new system alternative is

A)£(233,300).
B)£(283,300).
C)£(263,100).
D)£(273,100).

Question

(Ignore income taxes in this problem.) 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 capital budgeting analysis. Both alternatives are expected to have a useful life of eight years. The net present value of the new system alternative is

A)£(233,300). 
B)£(283,300). 
C)£(263,100). 
D)£(273,100).

Quizplus · Accepted Answer

The Answer of (Ignore income taxes in this problem.) 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 capital budgeting analysis. Both alternatives are expected to have a useful life of eight years. The net present value of the new system alternative is

A)£(233,300). 
B)£(283,300). 
C)£(263,100). 
D)£(273,100).

(Ignore Income Taxes in This Problem