Matty's Place Is Considering the Installation of a New Computer

Multiple Choice

Matty's Place is considering the installation of a new computer system that will cut annual operating costs by $11,000. The system will cost $48,000 to purchase and install. This system is expected to have a 5-year life and will be depreciated to zero using straight-line depreciation. What is the amount of the earnings before interest and taxes for this project?

A) -$9,600
B) $1,000
C) $1,400
D) $11,000
E) $20,600