A New Computer System Is Expected to Cost $40 Million

question 16

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 18 percent?

• A)Yes, because the net present value of the project is $2,473,948.
• B)No, because the net present value of the project is -$2,473,948.
• C)Yes, because the net present value of the project is $24.8 million.
• D)No, because the net present value of the project is -$24.8 million.
• E)Yes, because the net present value of the project is $1,342,688.