4 Use the following to answer questions 89-90:-2 (Ignore income taxes in this problem.) Westland College has a telephone system that is in poor condition. The system either can be overhauled or replaced with a new system. The following data have been gathered concerning these two alternatives: Present System New System Purchase cost when new. $150,000 $200,000 Accumulated depreciation........ $140,000 Overhaul costs needed now. $130,000 Annual cash operating costs.. $80,000 $70,000 Salvage value now... $60,000 Salvage value in 8 years. $52,000 $65,000 Working capital required........ $100,000 Westland College uses a 10% discount rate and the total cost approach to capital budgeting analysis. The working capital required under the new system would be released for use elsewhere at the conclusion of the project. Both alternatives are expected to have a useful life of eight years. 89. The net present value of overhauling the present system is: A) $(321,084) B) $(532,516) C) $(560,536) D) $(592,516) Answer: B Level: Hard LO: 1 90. The net present value of the new system alternative is: A) $(483,095) B) $(583,095) C) $(596,395) D) $(536,395) Answer: D Level: Hard LO: 1