Percy has been given the options of two computer software programs: Aay or Bee.

Aay costs $50,000 with a useful life of 5 years and Bee costs $37,000 with a useful life of

4 years. Cash inflows from Aay are expected to be $44,000pa whilst Bee is expecting

$37,000pa. Meanwhile, it has been known from past experience that new computer programs require things such as training new staff and additional PC protection kits. As Aay is more advanced than Bee, it is estimated to take a longer time to train the staff and hence it is estimated to cost $25,000pa compared to the $9000pa if Percy used Bee.

At the end of their useful life, Aay is estimated to be worth $3,300 whilst Bee only

$1,980, with the chosen one being replaced on a recurring basis. Percy will be using straight line depreciation for accounting and tax purposes (no matter what their salvage is). If both programs have an RRR of 17% after tax and Percy pays income tax of 40%, which is the most beneficial to him?

Calculate using the NPV in perpetuity method.