The New Corner Electronics Store wants to introduce a new computer system for its computer service. Development of the new system will take one year at a cost of 50,000. The table below shows the projected costs and benefits for the first six years of operation.

Year	Costs	Benefits
1	43,000	35,000
2	37,000	37,200
3	33,300	42,000
4	30,100	47,000
5	30,000	50,300
6	32,000	55,000

Do a cost-benefit analysis using the following methods:

a. Cash-flow analysis
b. Present value analysis. Assume the company uses a discount rate of 10% per annum.
c. What is your recommendation for The New Corner Electronics Store?

Answer rating: 100% (QA)

Answer The criterion of HicksKaldor states that a project or activity merits consideration or remains desirable when the total benefits exceed the tot... View the full answer