A company is facing an IT investment decision. To invest in either a hardwire T line (i.e., high speed data line that permits a high volume of information and visual documentation that can be sent quickly) or to invest in building a wireless network to take advantage of the wireless mobile communication devices. The company must make a mutually exclusive choice between two different IT investment alternatives (i.e., T line or wireless). Assume a discount rate of 25 percent. The initial cost and cash flow from the two projects are given in the table below:

a. What are the NPVs for Alternatives T line and wireless?

b. Which alternative should be selected based on NPV?

c. What are the PIs for Alternatives T line and wireless?

d. Which alternative should be selected based on PI alone?

	Alternative T line	Alternative wireless
Initial Cost	$60,000	$45,000
Cash Flow Year 1	$10,000	$70,000
Cash Flow Year 2	$40,000	$20,000
Cash Flow Year 3	$90,000	$5,000