[15] Four Seasons Ltd has in stock 16,100 litres of white wine that was bought five years ago for 5.75 per litre. The wine was purchased to use in a product line that has now been discontinued. The wine can be sold as it is for scrap at 3.91 per litre. An alternative would be to use it in one of the company's current frozen products, "Pasta e Vongole" [Pasta and Clams], which requires 1 litre of a different wine, available for 7.60 per litre. The white wine can be treated at a cost of 0.77 per litre so that it can be used as a substitute in the production of "Pasta e Vongole". However, after modification, 2 litres of white wine are required for every package of product. Four Seasons Ltd has received a request from a restaurant that could use the white wine in its production process. What is the minimum acceptable selling price of white wine that Four Seasons Ltd will have to charge? a) 3.60 b) 0.88 c) 3.03 d) 4.57 3 Marks Marinara Hospital currently runs on a very old patient registration and discharge system. The system, based on special software, can be either updated or replaced with a new one. The following data have been gathered concerning these two alternatives: New System Present System Update Purchase cost when 100,000 150,000 new Accumulated 90,000 depreciation Update cost today 80,000 Annual cash 30,000 20,000 operating costs Disposal value today 10,000 Disposal value in 2,000 five years 15,000 50,000 Working capital required Marinara Hospital uses a 12% discount rate and a total cost approach. Both alternatives are expected to have a useful life of five years. ACC1003/May 2 The Net Present Value of the "Present System Update" alternative is: a) (259,426) b) (269,426) c) (228,232) d) (230,000) 5