Spruce Bank Is Planning to Automate Some of Its Back

question 53

Multiple Choice

Spruce Bank is planning to automate some of its back office functions and reduce operating costs.The installation of new computers and software will require an initial investment of $1,000,000.The savings generated because of reduced personnel cost is $200,000 per year.The bank uses an 8 percent rate of discount to evaluate cost saving projects which are expected to last 10 years.

On further analysis,it is estimated that the project has a finite life of 5 years,i.e.further investment will be required to generate the same savings.Should they undertake the project if they assume a five-year horizon for evaluating the project?

• A)Yes,because the NPV of the project is $500,000.
• B)Yes,because the NPV of the project is $342,016.
• C)No,because the NPV of the project is -$500,000.
• D)No,because the NPV of the project is -$201,458.

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Definitions:

New Career Paradigms

Emerging perspectives on careers that emphasize flexibility, adaptability, and self-directed approaches to professional growth.

Old Career Paradigms

Traditional beliefs and models about careers which emphasize linear progression, lifelong employment with a single employer, and jobs as primary sources of identity.

Older Workers

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