com/courses/16985/assignments/251791?module_item_id=850727 Becker Billing Systems, Inc., has an antiquated high-capacity printer that needs to be upgraded. The company is faced with two alternatives; the system either can be overhauled or replaced with a new system. The following data have been gathered concerning these two alternatives (Ignore income taxes.): Overhaul Present Purchase New System System Purchase cost when new $ 300,000 $ 400,000 Accumulated depreciation $ 220,000 Overhaul costs needed now $ 250,000 Annual cash operating costs $ 120,000 $90,000 Salvage value now $ 90,000 Salvage value in ten years $ 30,000 $80,000 Working capital required $ 50.000 See separate Exhibit 138-1 and Exhibit 138-2. to determine the appropriate discount factor(s) using the See separate Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using the tables provided The company 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 ten years. Required: Calculate the payback period for each alternative. Calculate the net present value for each alternative. Calculate the profitability index for each alternative. Would you or would you not suggest that the company continue with one of the alternatives? If so, which alternative and why? * Previous Next OM com/courses/16985/assignments/251791?module_item_id=850727 Becker Billing Systems, Inc., has an antiquated high-capacity printer that needs to be upgraded. The company is faced with two alternatives; the system either can be overhauled or replaced with a new system. The following data have been gathered concerning these two alternatives (Ignore income taxes.): Overhaul Present Purchase New System System Purchase cost when new $ 300,000 $ 400,000 Accumulated depreciation $ 220,000 Overhaul costs needed now $ 250,000 Annual cash operating costs $ 120,000 $90,000 Salvage value now $ 90,000 Salvage value in ten years $ 30,000 $80,000 Working capital required $ 50.000 See separate Exhibit 138-1 and Exhibit 138-2. to determine the appropriate discount factor(s) using the See separate Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using the tables provided The company 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 ten years. Required: Calculate the payback period for each alternative. Calculate the net present value for each alternative. Calculate the profitability index for each alternative. Would you or would you not suggest that the company continue with one of the alternatives? If so, which alternative and why? * Previous Next OM