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Northstate 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: Present System Proposed New System Purchase cost when new.. $100,000 $150,000 Accumulated depreciation..90,000 Overhaul cost needed now. 80,000 Annual cash operating costs. 30,000 20,000 Salvage value now.. 10,000 Salvage value in 8 years. 2,000 15,000 Working capital required.50,000 Northstate College uses a 12% discount rate and the total cost approach to capital budgeting analysis. Both alternatives are expected to have a useful life of eight years. The net present value of the new system alternative is?

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Accounting Basics, Accounting

Category:- Accounting Basics
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