Neco 2024 Data Processing Question 40

Practice objective / multiple choice question 40 from the 2024 Neco Data Processing examination.

Neco 2024 Data Processing Objective / Multiple Choice Hard Difficulty
Question 40 NECO • 2024 • DATA_PROCESSING • objective

A small business is evaluating a cloud‑based accounting system. The system costs ₦120\,000 per year in subscription fees and a one‑time migration cost of ₦45\,000. It is expected to save ₦70\,000 per year in paperwork costs. The probability of a data‑loss incident falls from 8\% to 2\% and the average loss per incident is ₦250\,000. The business uses a discount rate of 10\% per annum and evaluates over 5 years. (i) Calculate the net present value (NPV) of adopting the system, showing how the reduction in expected loss is incorporated. (ii) Based on the NPV, should the business adopt the system? Explain.

Answer Options

A. NPV ≈ -₦200 000 (negative); therefore the business should not adopt the system.
Correct Answer B. NPV ≈ -₦177 678 (negative); therefore the business should not adopt the system.
C. NPV ≈ -₦150 000 (negative); therefore the business should not adopt the system.
D. NPV ≈ ₦25 000 (positive); therefore the business should adopt the system.
Correct Answer
B
Correct Option:
NPV ≈ -₦177 678 (negative); therefore the business should not adopt the system.

About This Question

This is Neco 2024 Data Processing Question 40. It is one of the objective questions from the 2024 Neco Data Processing examination.

Difficulty level: Hard .

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