Which system should the company buy

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Reference no: EM132044265

Company Ujsag is considering buying new computers. Cheap System requires an initial cash outlay of $10000 and is expected to last 3 years; or Better System that requires an initial cash outlay of $50000 and is expected to last 12 years. The Cheap System is expected to generate cash flow of $5800/year for each of its 3 years of life; while Better System is expected to generate $8000 cash flow/year. Which system should the company buy, if the firm’s required rate of return is 10%? Show work.

Reference no: EM132044265

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