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. See exhibits 13B-1 and 13B-2 to determine discount factors.

*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?

***Answer must be in excel format showing how you got the numbers***

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 $ 120.000 Annual cash operating costs $ 90.000 $ 90,000 Salvage value now $ 30.000 $ 80,000 Salvage value in ten years $ 50.000 Working capital required Appendix 13B: Present Value Tables EXHIBIT 130-1 Present Value of $t: 1 un 8 Periods 49 5 6 7% 8% 9% 10% 11% 12 13 14 15% 16% 17% 18% 19% 20% 21 22 23 24 0.962 0952 0.943 0935 0.926 0.917-0.909 0.901 0.893 0.885 0.877 0.870 0,862 0.855 0.847 0.840 0.833 0.826 0820 0.813 0.806 0.800 25% 2 0.925 0907 0.890 0.873 0.857 0842 0.826 0.812 0.797 0.783 0.769 0.756 0.743 0731 0.718 0.706 0.694 0683 0,672 0.661 0.650 0,640 3 0.8189 0.864 0840 0.816 0.794 0.772 0751 0.731 0.712 0.693 0.675 0,658 0.641 0624 0609 0.593 0579 0564 0551 0 537 0524 0.512 4 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.572 0.552 0534 0.516 0 499 0.482 0.467 0.451 0.437 0423 0.410 5 0822 0784 0747 0.713 0.681 0.650 0.621 0.593 0.567 0,543 0.519 0.497 0.476 0456 0.437 0419 0402 0 386 0370 0355 0.341 0.328 0.790 0.746 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 0.456 0.432 0.410 0.290 0.370 0352 0335 0319 0303 0.29 0.275 0.262 7 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.376 0.354 0.333 0.314 0.296 0.279 0.263 0249 0.235 0.222 0.210 0.731 0677 0.527 0.582 0.540 0.502 0.467 0.434 0.404 0.376 0.351 0.327 0.305 0.285 0.266 0.249 0 233 0.218 0.204 0.191 0.179 0.168 0.703 0.645 0.592 0544 0.500 0.460 0.424 0 391 0.361 0.333 0.308 0.284 0.263 0.243 0.225 0.209 0.194 0.10 0.167 0.155 0.144 0.134 10 0.676 0614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.295 0.270 0247 0.227 0.205 0.191 0.176 0.162 0 149 0.137 0.126 0.116 0.107 1 0.650 0.585 0.527 0.475 0.429 0.388 0 350 0317 0.287 0 261 0.237 0.215 0.195 0.178 0.162 0.148 0.135 0.123 0.112 0 103 0094 0.086 12 0.625 0.557 0.497 0.444 0.397 0.356 0319 0.286 0.257 0.231 0.208 0.187 0.168 0.152 0.137 0.124 0.112 0.102 0.092 0.083 0.076 0.069 13 0.601 0.530 0.469 0.415 0 368 0 326 0.290 0 258 0.229 0.204 0.182 0.163 0.145 0.130 0.116 0.104 0.093 0.084 0.075 0.06 0.061 0055 14 0.577 0505 0.442 0.388 0.340 0.299 0.263 0 232 0.205 0.181 0.160 0.141 0.125 0.11 0.099 0.088 0078 0.069 0.062 0055 0.049 0.044 15 0.555 0.481 0.417 0.362 0315 0.275 0.239 0.209 0.183 0.160 0.140 0.123 0.108 0.095 0.084 0074 0.065 0057 0.051 0.045 0.040 0.035 16 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.188 0.163 0.141 0.123 0.107 0.093 0.021 0.071 0.062 0.054 0.047 0.042 0026 0032 0.028 17 0.513 0.436 0 371 0.317 0.270 0231 0.198 0.170 0.146 0.125 0.108 0.093 0.080 0.069 0.060 0,052 0.045 0.039 0.034 0030 0.026 0.023 18 0.494 0.416 0.350 0.296 0.250 0.212 0.180 0.153 0.130 0.111 0.095 0.081 0.069 0.059 0.051 0.044 0.038 0.032 0028 0.024 0.021 0018 19 0.475 0.396 0331 0.277 0.232 0.194 0.164 0.138 0.116 0.098 0.083 0.070 0.060 0,051 0.043 0.037 0.031 0.027 0.023 0.020 0.017 0.014 20 0.456 0.377 0.312 0.258 0.215 0.178 0.149 0.124 0.104 0.087 0.073 0.061 0.051 0.043 0.037 0.031 0.026 0.022 0.019 0.016 0.014 0.012 21 0.439 0.359 0.294 0242 0.199 0 164 0.135 0.112 0.093 0.077 0.064 0.053 0.044 0.037 0.031 0.026 0.022 0.018 0.015 0.01 0.011 0.009 22 0.422 0.342 0.278 0.226 0.184 0.150 0.123 0.101 0.083 0.068 0.056 0.046 0.038 0.032 0.026 0.022 0.018 0015 0.013 0.011 0.009 0.007 23 0.406 0.326 0.262 0.211 0.170 0.139 0.112 0.091 0.074 0060 0.049 0.040 0.033 0.027 0.022 0018 0.015 0.012 0.010 0.009 0.007 0.006 24 0.390 0.310 0.247 0.197 0.158 0.125 0.102 0.082 0.066 0.053 0.043 0.035 0.028 0.023 0.019 0015 0.013 0.010 0008 0.007 0.006 0.005 25 0.375 0.295 0.233 0,184 0.146 0.116 0.092 0074 0.059 0.047 0.038 0.030 0.024 0.020 0.016 0.013 0.010 0.009 0.007 0.006 0.005 0.004 26 0.361 0.281 0.220 0.172 0.135 0.106 0,084 0.066 0.053 0.042 0.033 0.026 0.021 0.017 0.014 0.011 0.009 0.007 0.005 0.005 0.004 0.003 27 0347 0.268 0.207 0.161 0.125 0.098 0076 0.060 0.047 0.037 0.029 0.023 0018 0.014 0.011 0.009 0.007 0006 0.005 0.004 0.003 0.002 28 0.333 0.255 0.196 0.150 0.116 0.090 0,069 0.054 0042 0.033 0.026 0.020 0.018 0.012 0.010 0.008 0.006 0.005 0.004 2003 0.002 0.002 29 0.321 0243 0.185 0.141 0.107 0.082 0.063 0.048 0.037 0.029 0.022 0.017 0.014 0.011 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.002 30 0.308 0.231 0.174 0.131 0.099 0.075 0.057 0.044 0.033 0.026 0020 0,015 0012 0.009 0.007 0.005 0.004 0.003 0.003 0.002 0.002 0.001 40 0.208 0.142 0097 0.067 0.046 0032 0.022 0.015 0.011 0.008 0.005 0.004 0.003 0.002 0.001 0.001 0.001 0.000 0.000 0.000 0.000 0.000 EXHIBIT 130-2 Present Value of an Annuity of ST in Arrears Periods 5% 6% 9 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22 23 24 25% 1 0.962 0.952 0943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0 847 0 840 0.833 0,826 0 820 0913 0.806 0.800 2 1.886 1.859 1833 1.808 1.783 1.759 1.736 1713 1.690 1.668 1 647 1.626 1605 1.585 1566 1547 1528 1.509 1.492 1474 1457 1.440 3 2.775 2.723 2.673 2624 2.577 2.531 2.487 2.444 2.402 2.361 2.322 2283 2 246 2.210 2174 2.140 2.106 2074 2.042 2.011 1981 1952 4 3,630 3.546 9.465 3.387 3312 3.240 3.170 3.102 3.037 2.974 2 914 2.855 2.798 2 743 2690 2.639 2.589 2.540 2.494 2448 2404 2 362 5 4.452 4.329 4.212 4100 3.993 3.890 3.791 3.696 3.605 3 517 3.433 3.352 3 274 3.199 3127 3058 2.991 2.925 2 864 2803 2.745 2.689 6 5.242 5076 4.917 4.767 4.623 4.486 4 355 4231 4.111 3998 3.889 3.784 3.685 3589 3.498 3.410 3.326 3.245 3.167 3.092 3.020 2.951 7 6.002 5.786 5.582 5 389 5.206 5.033 4.868 4 712 4,564 4423 4.288 4.160 4039 3922 3.812 3706 3.605 3.508 3.416 3.327 3242 3.151 8 6.733 6.463 6.210 5.971 5.747 5.535 5.335 5.146 4.968 4.799 4.639 4 487 4 344 4.207 4.078 3 954 3.837 3.726 3.619 3518 3.421 3.329 9 7.435 7108 6,802 6.515 6.247 5.995 5.759 5.537 5.328 5.132 4 945 4.772 4 607 4.451 4,303 4.163 4.031 3.905 3.786 3.673 3.565 3463 10 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.889 5.650 5.426 5.216 5.019 4833 4.659 4.494 4339 4.192 4.054 3.923 3.799 3.682 3571 11 8.760 8.306 7.887 7.499 7.139 5.805 6495 6.207 5.938 5.687 5.453 5 234 5029 4.836 4.656 4.486 4,327 4.177 4035 3.902 3.776 3.656 12 9.385 8.863 8.384 7943 7.536 7.161 6814 6.492 6.194 5 918 5.660 5.421 5.197 4.988 4.793 4.611 4.439 4278 4.127 3.985 3.851 3.725 13 9.986 9.394 8.853 8.358 7904 7.487 7.103 6.750 5.424 6.122 5.842 5583 5.342 5.118 4910 4.715 4 533 4362 4.203 4.053 3.912 3.780 14 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.982 6.628 6.302 6.002 5.724 5 468 5 229 5.008 4.802 4 611 4.432 4.265 4.108 3.962 3,824 15 11.118 10 380 9.712 9. 108 8.559 8,061 7.606 7.191 6.811 6,462 6.142 5.847 5.575 5.324 5.092 4876 4,675 4.489 4.315 4.153 4.001 3.859 16 11.652 10.838 10.106 9.447 8.851 8.313 7.824 7.379 6.974 6.604 6.265 5.954 5.668 5 405 5.162 4.938 4730 4.536 4,357 4.189 4.033 3.887 17 12.166 11.274 10.477 9.763 9.122 8.544 8.022 7.549 7.120 6.729 6.373 6.047 5.749 5.475 5.222 4.990 4.775 4.576 4.391 4219 4.059 3.910 18 12.659 11.690 10.828 10.059 9.372 8.756 8 201 7.702 7.250 6.840 6.467 6.128 5.818 5 534 5.273 5.033 4812 4,608 4.419 4.243 4.080 3,928 19 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.839 7.366 6.938 6,550 6.198 5.877 5.584 5.316 5.070 4.843 4.635 4.442 4.263 4.097 3.942 20 13.590 12.462 11.470 10,594 9.818 9.129 8.514 7.963 7.469 7.025 6.623 6.259 5.929 5.628 5.353 5.101 4.870 4.657 4 460 4.279 4 110 3.954 21 14.029 12.821 11.764 10.836 10.017 9.292 8.649 8.075 7.562 7.102 6.687 6.312 5.973 5.665 5.384 5.127 4.891 4675 4 476 4 292 4.121 3.963 22 14.451 13.163 12.042 11.061 10.201 9.442 8.772 8.176 7.645 7.170 6,743 6.359 6.011 5.696 5.410 5.149 4.909 4.690 4.488 4 302 4.130 3.970 23 14.857 13.489 12 303 11 272 10.371 9580 8.883 8.266 7.718 7.230 6.792 6.399 6.044 5.723 5.432 5.167 4.925 4.703 4.499 4.311 4.137 3.976 24 15 247 13.799 12.550 11.469 10.529 9.707 8.985 8.348 7.784 7.283 6.835 6.434 6073 5.746 5.451 5.182 4.937 4.713 4.507 4318 4.143 3.981 25 15.622 14.094 12.783 1654 10,675 9.823 9.077 8.422 7.843 7.330 6.873 6.464 6.097 5.766 5.467 5.195 4.948 4.721 4.514 4 323 4.147 3985 26 15.983 14.375 13.003 11.826 10.810 9.929 9.161 8.488 7.896 7.372 6.906 6.491 6.118 5.783 5.480 5.206 4.956 4.728 4520 4 328 4 151 3.988 27 16.330 14,643 13.211 11.987 10.935 10.027 9.237 8.548 7.943 7.409 6.935 6.514 6.136 5.798 5.492 5.215 4.964 4.734 4.524 4.332 4.154 3.990 16.663 14.898 13.406 12.137 11.051 10.116 9.307 8.602 7.984 7.441 6.961 6.534 6.152 5.810 5.502 5.223 4970 4.739 4.528 4.335 4.157 3.992 29 16.984 15.141 13.591 12.278 11.158 10.198 9.370 8.650 8.022 7.470 6.983 6.551 6.166 5.820 5510 5.229 4 975 4743 4531 4.337 4.159 3 994 30 17.292 15.372 13.765 12.409 11.258 10.274 9.427 8.694 8.055 7,496 7.003 6.566 6.177 5.829 5.517 5.235 4.979 4.746 4534 4339 4.160 3.995 40 19.793 17.159 15.046 13,332 11.925 10.757 9.779 8.951 8.244 7.634 7.105 6.642 6.233 5.871 5.548 5.258 4.997 4.760 4.544 4 347 4 166 3.999 28