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Question: Lethbridge Company runs hardware stores in Alberta.

Lethbridge Company runs hardware stores in Alberta. Lethbridge’s management estimates that if it invests $160,000 in a new computer system, it can save $60,000 in annual cash operating costs. The system has an expected useful life of five years and no terminal disposal value. The required rate of return is 12%. Ignore income tax issues in your answers. Assume all cash flows occur at year-end except for initial investment amounts.

1. Calculate the following for the new computer system:
a. Net present value.
b. Payback period.
c. Internal rate of return.
d. Accrual accounting rate of return based on the net initial investment (assume straight-line depreciation).
2. What other factors should Lethbridge Company consider in deciding whether to purchase the new computer system?

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> Olav, a retired banker, served on the board of directors for a nationally prominent charitable organization. The local chapter of the charity discussed plans to purchase and relocate to a new building across town. Olav approached Mansfield, a close frien

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> The Chalmers family lived in poverty. Despite their destitute condition, Mrs. Chalmers bought several articles of jewelry for herself and an expensive painting for their home. When the retailer attempted to collect payment, Mr. Chalmers refused to pay. T

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> Peterman, a resident of Florida, sold a home in California to Oliveras. Peterman hired Fogelman, an attorney-at-law, to represent her at the real estate closing and provided Fogelman with a contract of agency, giving Fogelman the authority to sell the ho

> Pathek sold a pair of skis to Whelan, making no specific warranties or promises of any kind other than letting Whelan examine and try them. In fact, Pathek did not own the skis; he had only rented them. When the true owner claimed them, Whelan demanded h

> Liang was about to purchase an air-conditioning unit for her apartment at a closeout sale at Center City Appliance. The salesperson assured her that the unit was large enough to cool the apartment she described. The price was right, but she was nervous w

> Buynoski, the operator of a restaurant, served a dinner to Costas. Costas had nearly finished her soup when she found several metal chips in the bottom of her bowl. When Costas showed the chips to Buynoski, the restaurant owner was very apologetic and of

> Eamons offered to sell his sailboat, complete with boat trailer, to Fitzgerald for $12,000. Fitzgerald agreed to the offer, gave Eamons a deposit of $500, and said that he would pay the balance when he came back with his car to pick up the boat and trail

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> Miro, the owner of a supermarket, contracted with Market Supply Company for one complete checkout counter, including a cash register. After the counter was installed, but before the cash register was delivered, Market Supply Company demanded payment for

> Rios furnished Stern, a carpenter, with a set of sketches for a cabinet she wanted built. They orally agreed on a price of $1,000, the type of wood to be used, and the delivery date. Before Stern had begun work or obtained the necessary materials, Rios c

> Differentiate between the principal–agent and employer–employee relationships.

> Forell, a resident of Des Moines, purchased a nearly new Buick automobile from a seller in Cleveland for the unusually low price of $4,000. The seller explained that he was in town to take delivery of another automobile that he had just inherited from hi

> Fallon agreed in writing to purchase a used truck from Moonlit Motors with the understanding that a snowplow attachment would be added. When Fallon attempted to take delivery of the truck, he found that the plow attachment had not been added. He refused

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> Crowley, a building contractor, ordered 500 bags of cement from Litvak Building Supply. It was agreed that Litvak would deliver to a building site, and title would pass when delivery was made. Before the bags of cement could be loaded on a delivery truck

> Chiu agreed to sell his custom-built sailboat to Graham for $60,000. Before delivery, Chiu received another offer for $68,000 and wrote to Graham that he had decided not to sell his boat after all. a. Can Graham obtain a decree of specific performance? b

> Scher, a homeowner, purchased a vacuum cleaner from a door-to-door salesperson. When the salesperson demonstrated the machine in her home, it seemed to work quite effectively. After signing the contract, she checked several consumer magazines at the publ

> Central City Garage Builders contracted with Morgan for the construction of a two-car garage and an attached greenhouse of similar size. The garage was built on schedule, but, because of a shortage of special materials, it appeared that the construction

> Bushek signed a contract with Aluminum Window Products Company to replace the windows and wooden window frames of his house with new ones made of aluminum. The salesperson asked Bushek to sign a “routine form” to help ensure that credit would be granted.

> Rodrigos, the leader of a rock-and-roll group, agreed to provide music for the annual Park College Marketing Club dinner dance. On the night of the dinner dance, however, another, very amateurish group showed up and said that Rodrigos had assigned the co

> Westerfield contracted with Bradley Building Company for the construction of a ranch house as a wedding gift for his daughter. Before construction began, Westerfield died and Bradley announced that he would not build the house. Westerfield’s daughter bro

> Differentiate among disclosed principal, partially disclosed principal, and undisclosed principal.

> Becker, a college student, recognized that she was financially very dependent upon her widowed mother’s financial support while she was in college. To protect against the risk of financial loss in the event of her mother’s death, Becker persuaded her mot


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