Software Hub Is Deciding Whether to Purchase New Accounting Software

question 68

Multiple Choice

Software Hub is deciding whether to purchase new accounting software.The cost of the software package is $59,000,and its expected life is ten years.The payback for this investment is four years.Assuming equal yearly cash flows,what are the expected annual net cash savings from the new software? (Assume the investment has no residual value. )

• A)$5,900
• B)$44,250
• C)$14,750
• D)$236,000

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Definitions:

Discounting Principle

A concept in social psychology that suggests when there are multiple possible causes for a behavior, less significance is given to any single cause.

Correspondent Inference

An inference about a person's disposition or character based on observed behavior, especially when the behavior is freely chosen.

Consensus Effect

The tendency for people to overestimate the extent to which others share their views, beliefs, and experiences.

Self-Perception Theory

A theory suggesting that individuals determine their attitudes and preferences by observing their own behavior and the circumstances in which it occurs.