Spruce Bank Is Planning to Automate Some of Its Back

question 45

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.

What must be the minimum annual cost savings in order to accept this project? Assume a five-year horizon and 8 percent discount rate.

• A)$200,000.
• B)$222,256.
• C)$250,456.
• D)$279,724.

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Definitions:

Dependent Variables

Variables in experimental research that are expected to change as a result of manipulation of independent variables; they are the outcomes measured by the researcher.

Independent Variables

In an experiment, the variable that is manipulated or altered to examine its effect on a dependent variable.

Demand Characteristics

The cues in a study that might tell a research participant what behaviors are expected or desirable in that setting.

Confounds

Factors in an experiment that could undermine the ability to draw accurate conclusions by affecting the dependent variable in ways not accounted for by the independent variable.