Pineapple Ltd Is Considering Replacing Its Current Stock of Computers

question 57

Multiple Choice

Pineapple Ltd is considering replacing its current stock of computers with a new model.It plans to evaluate three options based on the following information:
Management is considering three options:
(i) Replace the old computers now and operate Model XA for four years,then replace with Model XD and operate for eight years,to be replaced in perpetuity;
(ii) Replace the old computers now and operate Model XXD for 12 years,to be replaced in perpetuity;
(iii) Replace the old computers now and undertake Model XA for three times its estimated life.
Which option should management choose?

• A)Option (i).
• B)Option (ii).
• C)Option (iii).
• D)Indifferent between options (i)and (ii).

---

Definitions:

Property

Refers to ownership of resources such as land, buildings, or intellectual property.

Liquidation

The process in which a debtor turns over all assets to a trustee.

Board

A group of individuals elected or appointed to govern the affairs of an organization.

Corporation's Assets

Corporation's Assets are all properties, both tangible and intangible, owned by a corporation, including cash, equipment, trademarks, and other resources.