Walker & Campsey Wants to Invest in a New Computer

question 41

Multiple Choice

Walker & Campsey wants to invest in a new computer system,and management has narrowed the choice to Systems A and B.​System A requires an up-front cost of $100,000,after which it generates positive after-tax cash flows of $60,000 at the end of each of the next two years.System B also requires an up-front cost of $100,000,after which it generates positive after-tax cash flows of $48,000 at the end of each of the next three years.The company's cost of capital is 11%.Based on the equivalent annual annuity,which system will be chosen?

• A)A for $1,622.88
• B)B for $1,622.88
• C)A for $7,083.47
• D)B for $7,083.47

---

Definitions:

Written Messages

Information or communication conveyed through written symbols or signs instead of spoken words.

Listeners

Individuals who give their attention to sound or action; in communication, those who receive and interpret messages.

Formal Research

A systematic investigation conducted to establish facts or principles or to collect information on a specific subject, typically following a predefined protocol.

Routine Tasks

Repetitive and regular activities performed as part of one's day-to-day professional responsibilities.