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ASAP Please! 1. The Corvette Corporation has a computer system that is in poor condition....

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Accounting

ASAP Please!

1. The Corvette Corporation has a computer system that is in poor condition. The system can be either overhauled or replaced with a new system. The following data have been gathered concerning these two alternatives:

Present System Proposed New System
Purchase cost when new $100,000 $150,000
Accumulated depreciation $90,000 -
Overhaul cost needed now $80,000 -
Annual cash operating costs $30,000 $20,000
Salvage value now $10,000 -
Salvage value in 8 years $2,000 $15,000
Working capital required - $50,000

The Corvette Corporation uses a 12% discount rate and the total cost approach to net present value analysis. Both alternatives are expected to have a useful life of eight years. The net present value of the alternative of overhauling the present system is closest to:

A. ($232,272)

B. ($108,000)

C. ($238,232)

D. ($228,232)

2. Malibu Systems is a division of a major corporation. Last year the division had total sales of $10,040,000, net operating income of $582,320, and average operating assets of $4,000,000. The company's minimum required rate of return is 14%. The division's return on investment (ROI) is closest to:

A. 14.6%

B. 36.6%

C. 4.1%

D. 0.9%

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