=+P12–17 NPV and ANPV decisions Richard and Linda Butler decide that it is time to purchase a high-definition (HD) television because the technology has improved and prices have fallen over the past 3 years. From their research, they narrow their choices to two sets, the Samsung 64-inch plasma with 1080p capability and the Sony 64-inch plasma with 1080p features. The price of the Samsung is $2,350, and the Sony will cost $2,700. They expect to keep the Samsung for 3 years; if they buy the more expensive Sony unit, they will keep the Sony for 4 years. They expect to sell the Samsung for $400 by the end of 3 years; they expect to sell the Sony for $350 at the end of year 4. Richard and Linda estimate the end-of-year entertainment benefits

(i.e., not going to movies or events and watching at home) from the Samsung to be

$900 and from the Sony to be $1,000. Both sets can be viewed as quality units and are equally risky purchases. They estimate their opportunity cost to be 9%.

The Butlers wish to choose the better alternative from a purely financial perspective. To perform this analysis they wish to do the following: