CGI Inc Is Developing a New Software Platform, Which Requires an an Immediate

question 71

Multiple Choice

CGI Inc. is developing a new software platform, which requires an immediate investment of $780 000 and another $260 000 in three years. Net returns expected are $450 000 after two years, $313 000 after four years, and $889 000 after six years. However, if they simply upgrade their current platform, it requires an immediate investment of $400 000, another $260 000 after two years, and $340 000 after four years. Net returns are $187 500 per year for 8 years. Determine the net present value at 5.9%. Which project is preferable according to the net present value criterion?

• A) New Software platform by $53 309
• B) Upgrade by $53 309
• C) Upgrade by $277 277
• D) New Software platform by $70 203
• E) New Software platform by $76 599

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Definitions:

Contract Term

A specific duration or period during which an agreement is effective and enforceable by law.

Mistake

An error in understanding or judgment that can affect the terms or validity of a contract.

Economic Duress

involves the use of unlawful economic pressure to compel a party to act against their will in entering into a contract, impacting the agreement's voluntariness.

Coercive Acts

Laws or measures taken to force someone to comply with certain rules or regulations, often seen in historical contexts like the British legislation before the American Revolution.