10.5 Net present value: Blanda Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive, and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. If the firm uses a 9 percent discount rate for production system projects, in which system should the firm invest? Year System 1 System 2 -$15,000 -$45,000 1 15,000 32,000 2 15,000 32,000 3 15,000 32,000 10.6 Payback: Refer to Problem 10.5. What are the payback periods for production systems 1 and 2? If the systems are mutually exclusive and the firm always chooses projects with the lowest payback period, in which system should the firm invest? 10.7 Payback: Quebec, Inc., is purchasing machinery at a cost of $3,768,966. The company's management expects the machinery to produce cash flows of $979,225, $1,158,886, and $1,881,497 over the next three years, respectively. What is the payback period? 10.8 Payback: Northern Specialties just purchased inventory-management computer software at a cost of $1,645,276. Cost savings from the investment over the next six years will produce the following cash flow stream: $212,455, $292,333, $387,479, $516,345, $645,766, and $618,325. What is the payback period on this investment?

Note: It is a situation where multiple questions have been asked, so we are allowed to solve the first question in the case when no question is specifically asked to solve as per the rules of Bartleby. Please keep posting other questions separately. Net Present Value(NPV) is amongst one of the modern techniques of capital budgeting which considers the time value of money by taking into consideration the present value of cash flows at a specific discount rate. It is calculated using the present values of cash inflows and the present value of cash outflows. The Payback period is a traditional capital budgeting technique that does not consider the time value of money. It is defined as the length of the time required to meet the initial cost of the investment or the proposal. This technique is easy and simple to calculate. Using this technique of capital budgeting one can easily identify the number of years required by the project to cover up its initial cost or say the time period after which the investment starts gaining profits.Here, 10.5 For System 1 It is calculated as follows:For System 2 It can be calculated as follows: The Net Present Value of System 1 is $22,969.42 and the Net Present Value of System 2 is $36,001.43 Since here systems are mutually exclusive, So acceptance of one system automatically leads to rejection of another system . Here Net Present Value (NPV ) of System 2 is more than the Net Present Value (NPV) of System 1 and in the case of Mutually Exclusive Projects, Projects with higher Net Present Value is chosen. So System 2 should be selected and the firm should invest in this system only which is in System 2 as a higher net present value means the present value of benefits are more than the present value of costs.Part 10.6 For System 1 It can be calculated as follows: For System 2 It can be calculated as follows: Payback Period of System 1 and System 2 are 1 year and 1.41 years respectively Here systems are mutually exclusive and the firm always chooses a project with the lowest payback period. So Firm should invest in System 1 as its payback period is less than the Payback Period of System 2.Answer: Part 10.5 Firm Should Invest in System 2 as its Net Present Value is greater than the Net Present Value of System 1. Part 10.6 Payback Period of System 1 and System 2 are 1 year and 1.41 years respectively. The firm should invest in System 1 as its Payback period is lower than the Payback period of System 2.

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