The mayor of Statesville is considering the purchase of a new computer system for the city's tax
Fantastic news! We've Found the answer you've been seeking!
Question:
The mayor of Statesville is considering the purchase of a new computer system for the city's tax department. The system costs $75,000 and has an expected life of five years. The mayor estimates the following savings will result if the system is purchased: Picture Statesville uses a 10% discount rate for capital-budgeting decisions. A salesperson from a different computer company claims that his machine, which costs $85,000 and has an estimated service life of four years, will generate annual savings for the city of $32,000. If the discount rate is 10%, the net present value of this system would be:
$16,440.
$23,175.
$63,512.
$101,440.
None of the other answers are correct.
Related Book For
Accounting For Managers Interpreting Accounting Information for Decision Making
ISBN: 978-1119979678
4th edition
Authors: Paul M. Collier
Posted Date: