You must procure a new network computer system for your company. You have a choice of two options. The two options are as follows: Option 1 Option 2 Cost R30 000 R40 000 Installation Cost R10 000 R5 000 Yearly Maintenance R3 500 R3 000 Yearly Profit R10 000 R8 000 Project Lifetime 5 years 8 years Estimated rate of return Year 0,1,2,3 = 10%, Year 4,5,6 = 8%, Year 7,8 = 5%.

For Option 1: 13) The NPV for year 0 is: a) R30000 b) -R30000 c) R40000 d) -R40000 14) The NPV for year 1 is: a) -R5900,09 b) -R5909,09 c) -R5912,09 d) -R5915,09 15) The NPV for year 2 is: a)-R5371,90 b)-R5365,90 c)-R5375,90 d)-R5360,90 16) The NPV for year 3 is: a)-R4876,55 b)-R4885,55 c)-R4880,55 d)-R4883,55 17) The NPV for year 4 is: a)-R4545,59 b)-R4535,80 c)-R4521,80 d)-R4539,59 Page 30 of 34 PJMTMY2 18) The NPV for year 5 is: a)-R4130,85 b)-R4186,85 c)-R4140,99 d)-R4145,99 19) The NPV for option 1 is: a) -R15126,80 b) -R19126,80 c) -R35359,89 d) -R5359,89 For Option 2: 20) The NPV for year 0 is: a) R45000 b) -R40000 c) R40000 d) -R45000 21) The NPV for year 1 is: a)-R4545,45 b)-R4530,50 c)-R4550,45 d)-R4545,45 22) The NPV for year 2 is: a)-R4172,23 b)-R4132,23 c)-R4128,23 d)-R4129,23 Page 31 of 34 PJMTMY2 23) The NPV for year 3 is: a)-R3756,57 b)-R3760,57 c)-R3745,57 d)-R3776,57 24) The NPV for year 4 is: a)-R3430,07 b)-R3420,07 c)-R3478,31 d)-R3415,07 25) The NPV for year 5 is: a)-R3106,61 b)-R3110,61 c)-R3100,61 d)-R3220,66 26) The NPV for year 6 is: a) -R2830,37 b) -R2982,09 c) -R2818,37 d) -R2825,37 27) The NPV for year 7 is: a)-R2560,79 b)-R2840,09 c)-R2565,79 d)-R2557,79 Page 32 of 34 PJMTMY2 28) The NPV for year 8 is: a)-R2704,84 b)-R2337,54 c)-R2327,54 d)-R2340,54 29) The NPV for option 2 is: a)-R13325,37 b)-R20000,37 c)-R17339,80 d)-R10000,37 30) Which is the better option to choose? a) Option 1 b) Option 2 c) Both d) None of the above