ell Mountain Vineyards is considering updating its current manual accounting sys

Question

ell 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

ell 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's opportunity cost of capital is 14.6 percent, and the costs and values of investments made at different times in the future are as follows: Calculate the NPV of each choice The NPV of each choice is:

Explanation / Answer

NPVo = 7000- 5000 = 2000

NPV1 = 7000- 4700 /1.146 = 2300/1.146 = 2006.98

NPV2 = 7000 - 4400/1.146^2 = 2600/1.146^2 = 1979.72

NPV3 = 7000 - 4100/1.146^3 = 2900/1.146^3 = 1926.83

NPV4 = 7000 - 3800/1.146^4 = 3200/1.146^4 = 1855.29

NPV5 = 7000 - 3500/1.146^5 = 3500/1.146^5 = 1770.7

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.