Richard and Linda Butler decide that it is time to purchase a high definitial televisiton because the technology has improved and prices have fallen of the past 3 years.

From their research, they narrow their choices to two sets, the Samsun 42-inch LCD with 1080p capability and the Sony 42-inch LCD 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 be able to sell the Samsung for $400 by the end of 3 years; they expect they could sell the Sony for $350 atr the end of year 4. Richard and Linda estimate that 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 for 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 alaternative from a purly financial perspective. To perform this analysis they wish to do the following:

a

Determine the NPV of the Samsung HD LCD

b

Determine the ANPV of the Samdung HD LCD

c

Determine the NPV of the Sony HD LCD

d

Determine the ANPV of the Sony HD LCD

e

Which set should the Butlers purchase and why?