Tawstir Corporation Has 800 Obsolete Personal Computers That Are Carried

question 26

Multiple Choice

Tawstir Corporation has 800 obsolete personal computers that are carried in inventory at a total cost of $1, 100, 000.If these computers are upgraded at a total cost of $40, 000, they can be sold for a total of $750, 000.As an alternative, the computers can be sold in their present condition for $690, 000. Suppose the selling price of the upgraded computers has not been set.At what selling price per unit would the company be as well off upgrading the computers as if it just sold the computers in their present condition?

• A)$86.50
• B)$887.50
• C)$912.50
• D)$562.50

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Definitions:

Straight-Line Depreciation

A method of calculating the depreciation of an asset where its cost is evenly spread across its useful life.

Initial Investments

The initial amount of money spent to start a project, purchase assets, or establish a business.

After-Tax Discount Rate

The rate of return after taxes have been calculated, used in evaluating the profitability of investment opportunities.

Income Tax Rate

The rate at which income is taxed for a person or a company.