The Local School Board Is Considering the Purchase of a Computer

question 16

Multiple Choice

The local school board is considering the purchase of a computer. It will cost $100,000 and will be sold back to the dealer at the end of 6 years for $8,000. If the required rate of return is 14%, what is the minimal annual cost saving required to justify the purchase? Ignore income taxes.

• A) $25,714
• B) $23,142
• C) $24,776
• D) $23,656

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Definitions:

Ceiling Fans

Mechanical fans mounted on the ceiling of a room, used to circulate air for cooling or ventilation purposes.

Imposition

The act of establishing something by authority, such as a tax, duty, or penalty.

Gifts

Items or funds given voluntarily without compensation by one party to another, often as a gesture of goodwill or to mark a special occasion.

Conditions

Terms or stipulations specified in a contract or agreement that must be fulfilled before certain obligations or rights become effective.