(Ignore Income Taxes in This Problem

question 40

Multiple Choice

(Ignore income taxes in this problem.) Allen College has a telephone system that is in poor condition. The system can be either overhauled or replaced with a new system. The following data have been gathered concerning these two alternatives:

Allen College uses a 12% discount rate and the total cost approach to net present value analysis. Both alternatives are expected to have a useful life of eight years.
-The net present value of the alternative of replacing the present system with the proposed new system is closest to:

• A)$(233,300)
• B)$(283,300)
• C)$(263,100)
• D)$(273,100)

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Definitions:

Unsubstantiated Generalizations

Statements made broadly about a group, situation, or phenomenon without supporting evidence or data.

Self-Actualized Individual

A person who has achieved the highest level of growth and self-fulfillment, according to Maslow's hierarchy of needs.

Completely

An adverb indicating something has been done in a whole, full, or total manner, without omission.

Abram Maslow

A psychologist famous for formulating Maslow's hierarchy of needs, a theory of psychological health predicated on fulfilling innate human needs in priority, culminating in self-actualization.