Arthur Operates a Part-Time Auto Repair Service

Arthur operates a part-time auto repair service.He estimates that a new diagnostic computer system will result in increased cash inflows of $2,100 in Year 1,$3,200 in Year 2,and $4,000 in Year 3.If Arthur's discount rate is 10%,what would be the maximum amount he should be willing to pay for the new computer system? (Ignore income taxes in this problem.)

A) $6,652.
B) $6,984.
C) $7,556.
D) $7,747.

Correct Answer:

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