The old system requires two people to operate it, but the new system would require only a single operator. The new lighting system will cost $132,950 and save the theater $27,000 annually for the next eight years. Use Appendix A for your reference. Note: Use appropriate factor(s) from the tables provided. Required: I-a. Prepare a table showing the proposed lighting system's net present value for each of the following discount rates: 8 percent, 10 percent, 12 percent, 14 percent, and 16 percent. 1-b. Based on your findings in requirement 1-a., Which statement is true?
The old system requires two people to operate it, but the new system would require only a single operator. The new lighting system will cost $132,950 and save the theater $27,000 annually for the next eight years. Use Appendix A for your reference. Note: Use appropriate factor(s) from the tables provided. Required: I-a. Prepare a table showing the proposed lighting system's net present value for each of the following discount rates: 8 percent, 10 percent, 12 percent, 14 percent, and 16 percent. 1-b. Based on your findings in requirement 1-a., Which statement is true?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Subject: accounting
Transcribed Image Text:Vancouver Shakespearean Theater's board of directors is considering the replacement of the theater's lighting system.
The old system requires two people to operate it, but the new system would require only a single operator. The new
lighting system will cost $132,950 and save the theater $27,000 annually for the next eight years.
Use Appendix A for your reference.
Note: Use appropriate factor(s) from the tables provided.
Required:
1-a. Prepare a table showing the proposed lighting system's net present value for each of the following discount rates: 8 percent, 10
percent, 12 percent, 14 percent, and 16 percent.
1-b. Based on your findings in requirement 1-a., Which statement is true?
Complete this question by entering your answers in the tabs below.
Req 1A
Prepare a table showing the proposed lighting system's net present value for each of the following discount rates: 8 percent,
10 percent, 12 percent, 14 percent, and 16 percent.
Note: Round "Annuity Discount Factor" to 3 decimal places. Negative amounts of "Net Present Value" should be indicated by a
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Discount Rate
Req 1B
8%
10%
12%
14%
16%
Annuity
Discount
Factor
Annual
Savings
Present Value of Acquisition
Annual Savings
Cost
Net Present
Value
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