Considering investing in two alternative production systems

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Reference no: EM131838973

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 10 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 -$12,700 -$44,100 1 12,700 32,300 2 12,700 32,300 3 12,700 32,300 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 or system 2?

Reference no: EM131838973

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