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. Determine the net present value at 5.9%. Which project is preferable according to the net present value criterion?
A) New Software platform by $53 309
B) Upgrade by $53 309
C) Upgrade by $277 277
D) New Software platform by $70 203
E) New Software platform by $76 599

Question

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The Answer of 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. Determine the net present value at 5.9%. Which project is preferable according to the net present value criterion?
A) New Software platform by $53 309
B) Upgrade by $53 309
C) Upgrade by $277 277
D) New Software platform by $70 203
E) New Software platform by $76 599

CGI Inc Is Developing a New Software Platform, Which Requires an an Immediate