Richard and linda butler decide that it is time to purchase


Richard and Linda Butler decide that it is time to purchase a high definition television because the technology has improved and prices have fallen of the past 3 years. From their research, they narrow their choices to two sets, the Samsun 42-inch LCD with 1080p capability and the Sony 42-inch LCD with 1080p features. The price of the Samsung is $2,350 and the Sony will cost $2,700. They expect to keep the Samsung for 3 years; if they buy the more expensive Sony unit, they will keep the Sony for 4 years. They expect to be able to sell the Samsung for $400 by the end of 3 years; they expect they could sell the Sony for $350 atr the end of year 4. Richard and Linda estimate that the end-of-year entertainment benefits (i.e. not going to movies or events and watching at home) from the Samsung to be $900 and for the Sony to be $1,000. Both sets can be viewed as quality units and are equally risky purchases. They estimate their opportunity cost to be 9%. The Butlers wish to choose the better alaternative from a purly financial perspective. To perform this analysis they wish to do the following: a Determine the NPV of the Samsung HD LCD b Determine the ANPV of the Samdung HD LCD c Determine the NPV of the Sony HD LCD d Determine the ANPV of the Sony HD LCD e Which set should the Butlers purchase and why?

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Financial Management: Richard and linda butler decide that it is time to purchase
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