Allen College Has a Telephone System That Is in Poor

Multiple Choice

Allen College has a telephone system that is in poor condition. The system can be either overhauled or replaced with a new system. The following data have been gathered concerning these two alternatives: Allen College uses a 12% discount rate and the total cost approach to net present value analysis. Both alternatives are expected to have a useful life of eight years. The net present value of the alternative of overhauling the present system is closest to:

A) ($238,232)
B) ($108,000)
C) ($228,232)
D) ($232,272)