(Present Value Tables Are Required

question 123

Multiple Choice

(Present value tables are required. ) Calby Enterprises is evaluating the purchase of a new computer network system.The new system would cost $25,000 and have a useful life of 6 years.At the end of the system's life,it would have a residual value of $3,000.Annual operating cost savings from the new system would be $8,800 per year for each of the six years of its life.Calby Enterprises has a minimum required rate of return of 12% on all new projects.The net present value of the new network system would be closest to

• A)$9,656.
• B)$12,698.
• C)$11,177.
• D)$37,698.

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Definitions:

Fireproof Vault

A secure storage unit designed to protect contents from fire, typically used to safeguard valuable documents and items.

Grossprofit Ratio

A financial metric that measures the proportion of money left over from revenues after accounting for the cost of goods sold (COGS), expressed as a percentage of sales.

Replacement Cost

The current cost of replacing an asset with a new one of similar style and quality.

Non-Cancellable

A term that describes a contract or agreement that cannot be terminated or cancelled before its expiration or predetermined end date.