Peter Wants to Buy a Computer Which He Expects to Save

question 75

Multiple Choice

Peter wants to buy a computer which he expects to save him $4,000 each year in bookkeeping costs. The computer will last for five years, and at the end of five years it will have no salvage value. If Peter's required rate of return is 12%, what is the maximum price Peter should be willing to pay for the computer now?

• A)$20,000
• B)$14,420
• C)$11,340
• D)$10,830

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Definitions:

Cognitive Development

The process of growth and change in intellectual/mental abilities such as thinking, reasoning, and understanding.

Physical Development

The process of physical growth and change that occurs throughout life, including developments in motor skills, muscle and skeletal growth, and changes in body composition.

Psychological Development

Refers to the emotional, cognitive, and social development that occurs throughout a person's lifespan.

Speech Disorder

A condition affecting the ability to produce or understand spoken language, stemming from neurological, physiological, or cognitive issues.