RTB plc has recently assessed a potential project to make and sell a newly developed product. Two possible alternative systems have been identified, either one of which could be used to make the product. The results of the assessment can be summarised as follows:

The business’s cost of finance is 10 per cent p.a.
Which system should the business select?
Explain what assumptions you have made about the business and your reasons for the selection made.

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Initial NPV IRR investment m % m Using System A Using System B 4.0 16 4.0 6.0 13 6.0