32) CGI Inc. is developing a new software platform, which requires an immediate investment of $780 000 and another $260 000 in three years. Net returms expected are $450 000 after two years, $313 000 after four years, and $889 000 after six years. However, if they simply upgrade their current platform, it requires an immediate investment of S400 000, another $260 000 after two years, and $340 000 after four years. Net refurns are Sl87 500 per year for 8 years Determine the net present value at 5.9%. Which project is preferable according to the net present value criterion?
32) CGI Inc. is developing a new software platform, which requires an immediate investment of $780 000 and another $260 000 in three years. Net returms expected are $450 000 after two years, $313 000 after four years, and $889 000 after six years. However, if they simply upgrade their current platform, it requires an immediate investment of S400 000, another $260 000 after two years, and $340 000 after four years. Net refurns are Sl87 500 per year for 8 years Determine the net present value at 5.9%. Which project is preferable according to the net present value criterion?
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter12: Capital Investment Decisions
Section: Chapter Questions
Problem 21BEA
Related questions
Question
![32) CGI Inc. is developing a new software platform, which requires an immediate investment of $780 000 and another
$260 000 in three years. Net returns expected are S450 000 after two years, $313 000 after four years, and $889 000
after six years. However, if they simply upgrade their current platform, it requires an immediate investment of S400
000, another $260 000 after two years, and $340 000 after four years. Net refurns are Sl87 500 per year for 8 years
Determine the net present value at 5.9% Which project is preferable according to the net present value criterion?
Upgrade by $53 309
Upgrade by $277 277
New Software platform by $76 $99
O New Software platform by $53 309](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffe3b4b27-5af4-4478-bd2e-e92741da337f%2F9b2d2767-561c-436c-8211-3c966fccf104%2Fkgt9oeu_processed.jpeg&w=3840&q=75)
Transcribed Image Text:32) CGI Inc. is developing a new software platform, which requires an immediate investment of $780 000 and another
$260 000 in three years. Net returns expected are S450 000 after two years, $313 000 after four years, and $889 000
after six years. However, if they simply upgrade their current platform, it requires an immediate investment of S400
000, another $260 000 after two years, and $340 000 after four years. Net refurns are Sl87 500 per year for 8 years
Determine the net present value at 5.9% Which project is preferable according to the net present value criterion?
Upgrade by $53 309
Upgrade by $277 277
New Software platform by $76 $99
O New Software platform by $53 309
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps with 3 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Managerial Accounting: The Cornerstone of Busines…](https://www.bartleby.com/isbn_cover_images/9781337115773/9781337115773_smallCoverImage.gif)
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
![Intermediate Financial Management (MindTap Course…](https://www.bartleby.com/isbn_cover_images/9781337395083/9781337395083_smallCoverImage.gif)
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
![Managerial Accounting: The Cornerstone of Busines…](https://www.bartleby.com/isbn_cover_images/9781337115773/9781337115773_smallCoverImage.gif)
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
![Intermediate Financial Management (MindTap Course…](https://www.bartleby.com/isbn_cover_images/9781337395083/9781337395083_smallCoverImage.gif)
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
![Cornerstones of Cost Management (Cornerstones Ser…](https://www.bartleby.com/isbn_cover_images/9781305970663/9781305970663_smallCoverImage.gif)
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning