The mayor of Smalltown, Western Australia, is considering the purchase of a computer system to automate the city's rate collections. The system costs $75 000 and has an estimated life of five years. The mayor estimates the following savings will result if the system is purchased.
If Smalltown uses a 10 per cent discount rate for capital budgeting decisions, what is the net present value of the computer system?

Question

The mayor of Smalltown, Western Australia, is considering the purchase of a computer system to automate the city's rate collections. The system costs $75 000 and has an estimated life of five years. The mayor estimates the following savings will result if the system is purchased. 
If Smalltown uses a 10 per cent discount rate for capital budgeting decisions, what is the net present value of the computer system?

Quizplus · Accepted Answer

The Answer of The mayor of Smalltown, Western Australia, is considering the purchase of a computer system to automate the city's rate collections. The system costs $75 000 and has an estimated life of five years. The mayor estimates the following savings will result if the system is purchased. 
If Smalltown uses a 10 per cent discount rate for capital budgeting decisions, what is the net present value of the computer system?

The Mayor of Smalltown, Western Australia, Is Considering the Purchase