Bell Mountain Vineyards is considering updating its current manual accounting sy

Question

Bell Mountain Vineyards is considering updating its current manual accounting system with a high-end electronic system. While the new accounting system would save the company money, the cost of the system continues to decline. The Bell Mountain%u2019s opportunity cost of capital is 12.6  percent, and the costs and values of investments made at different times in the future are as follows:

The NPV of each choice is:

Year Cost Value of Future Savings
(at time of purchase) 0 $5,000 $7,000 1 4,150 7,000 2 3,300 7,000 3 2,450 7,000 4 1,600 7,000 5 750 7,000 Bell Mountain Vineyards is considering updating its current manual accounting system with a high-end electronic system. While the new accounting system would save the company money, the cost of the system continues to decline. The Bell Mountain%u2019s opportunity cost of capital is 12.6 percent, and the costs and values of investments made at different times in the future are as follows: Calculate the NPV of each choice. (Round answers to the nearest whole dollar, e.g. 5,275.) The NPV of each choice is:

Explanation / Answer

NPV0=2000

NPV1=2430.8

NPV2= 2915.6

NPV3=3185

NPV4=3358.8

NPV5=3450

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