Neco 2017 Data Processing Question 42

Practice objective / multiple choice question 42 from the 2017 Neco Data Processing examination.

Neco 2017 Data Processing Objective / Multiple Choice Hard Difficulty
Question 42 NECO • 2017 • DATA_PROCESSING • objective

A small business is deciding between buying a local server and subscribing to a cloud storage service. The local server costs ₦1,200,000, has a salvage value of ₦200,000 after 5 years, and incurs annual maintenance of ₦50,000 and electricity cost of ₦30,000. Use straight‑line depreciation. The cloud service charges a monthly subscription of ₦25,000 plus ₦500 per GB of data transferred. The business transfers an average of 200 GB each month. Assuming a discount rate of \(8\\%\) per annum, calculate the present value of the total 5‑year cost for each option and state which option is more cost‑effective.

Answer Options

A. Cloud service is more cost‑effective; PV ≈ ₦1,050,000 for the cloud versus ₦6,200,000 for the server.
B. Local server is more cost‑effective; PV ≈ ₦1,200,000 for the server versus ₦5,500,000 for the cloud.
Correct Answer C. Local server is more cost‑effective; PV ≈ ₦1,118,078 for the server versus ₦5,989,636 for the cloud.
D. Both options have similar costs; PV ≈ ₦1,118,078 for the server and ₦1,118,500 for the cloud.
Correct Answer
C
Correct Option:
Local server is more cost‑effective; PV ≈ ₦1,118,078 for the server versus ₦5,989,636 for the cloud.

About This Question

This is Neco 2017 Data Processing Question 42. It is one of the objective questions from the 2017 Neco Data Processing examination.

Difficulty level: Hard .

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