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 their production systems. (Enter negative amounts using negative sign, e.g. -45.25. Round answers to 2 decimal places, e.g. 15.25.) Year System 1 System 2 0 -$12,400 -$43,000 1 12,400 32,600 2 12,400 32,600 3 12,400 32,600 Calculate NPV. NPV of System 1 is $ and NPV of System 2 is $ . Which system should the firm invest? The firm should invest in .system 1 system2
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 their production systems. (Enter negative amounts using negative sign, e.g. -45.25. Round answers to 2 decimal places, e.g. 15.25.) Year System 1 System 2 0 -$12,400 -$43,000 1 12,400 32,600 2 12,400 32,600 3 12,400 32,600 Calculate NPV. NPV of System 1 is $ and NPV of System 2 is $ . Which system should the firm invest? The firm should invest in .system 1 system2
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 4EA: Assume a company is going to make an investment of $450,000 in a machine and the following are the...
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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 their production systems. (Enter negative amounts using negative sign, e.g. -45.25. Round answers to 2 decimal places, e.g. 15.25.)
Year | System 1 | System 2 | |||||
0 | -$12,400 | -$43,000 | |||||
1 | 12,400 | 32,600 | |||||
2 | 12,400 | 32,600 | |||||
3 | 12,400 | 32,600 |
Calculate NPV.
NPV of System 1 is $
|
Which system should the firm invest?
The firm should invest in
.system 1 system2 |
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