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 $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 $400,000, another $260,000 after two years, and $340,000 after four years. Net returns are $187,500 per year for 8 years. The rate of interest is 6.9%. Which project is preferable according to the net present value / IRR criterion?
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 $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 $400,000, another $260,000 after two years, and $340,000 after four years. Net returns are $187,500 per year for 8 years. The rate of interest is 6.9%. Which project is preferable according to the net present value / IRR criterion?
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
Related questions
Question
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 $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 $400,000, another $260,000 after two years, and $340,000 after four years. Net returns are $187,500 per year for 8 years. The rate of interest is 6.9%. Which project is preferable according to the net present value / IRR criterion?
Expert Solution
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 3 steps
Recommended textbooks for you
Advanced Engineering Mathematics
Advanced Math
ISBN:
9780470458365
Author:
Erwin Kreyszig
Publisher:
Wiley, John & Sons, Incorporated
Numerical Methods for Engineers
Advanced Math
ISBN:
9780073397924
Author:
Steven C. Chapra Dr., Raymond P. Canale
Publisher:
McGraw-Hill Education
Introductory Mathematics for Engineering Applicat…
Advanced Math
ISBN:
9781118141809
Author:
Nathan Klingbeil
Publisher:
WILEY
Advanced Engineering Mathematics
Advanced Math
ISBN:
9780470458365
Author:
Erwin Kreyszig
Publisher:
Wiley, John & Sons, Incorporated
Numerical Methods for Engineers
Advanced Math
ISBN:
9780073397924
Author:
Steven C. Chapra Dr., Raymond P. Canale
Publisher:
McGraw-Hill Education
Introductory Mathematics for Engineering Applicat…
Advanced Math
ISBN:
9781118141809
Author:
Nathan Klingbeil
Publisher:
WILEY
Mathematics For Machine Technology
Advanced Math
ISBN:
9781337798310
Author:
Peterson, John.
Publisher:
Cengage Learning,
