Walker & Campsey Wants to Invest in a New Computer

Multiple Choice

Walker & Campsey wants to invest in a new computer system,and management has narrowed the choice to Systems A and B.​System A requires an up-front cost of $100,000,after which it generates positive after-tax cash flows of $60,000 at the end of each of the next two years.System B also requires an up-front cost of $100,000,after which it generates positive after-tax cash flows of $48,000 at the end of each of the next three years.The company's cost of capital is 11%.Based on the equivalent annual annuity,which system will be chosen?

A) A for $1,622.88
B) B for $1,622.88
C) A for $7,083.47
D) B for $7,083.47