A New Computer System Is Expected to Cost $40 Million

question 76

Multiple Choice

A new computer system is expected to cost $40 million and generate annual savings of $12 million over the next five years.

Should the bank invest in this project if the discount rate is 12 percent?

• A)Yes,because the net present value of the project is $3,257,314.
• B)No,because the net present value of the project is -$3,257,314.
• C)Yes,because the net present value of the project is $20 million.
• D)No,because the net present value of the project is -$20 million.

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Definitions:

Bronchodilator

A medication that relaxes the muscles of the airways, increasing airflow to the lungs, used in treating respiratory conditions.

Inhaled Steroid

A medication delivered directly into the lungs via inhalation to reduce inflammation and manage respiratory conditions.

Enteral Tube

A tube used for delivering nutrients directly to the stomach or small intestine, bypassing oral intake.

Percutaneous Endoscopic Gastrostomy

A medical procedure where a tube is placed through the abdomen into the stomach to provide nutrition directly.