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A company is considering whether to upgrade its MIS system. If it chooses the basic upgrade, it will cost $10,279 and it will increase
A company is considering whether to upgrade its MIS system. If it chooses the basic upgrade, it will cost $10,279 and it will increase firm cash flows by $3,097 a year through increased productivity. If it chooses the premium upgrade, it will cost $21,892 and it will increase firm cash flows by $6,225 a year. Both upgrades have an expected useful life of 4 years. The firm can choose one upgrade solution or continue to use the current system. The opportunity cost of capital is 7.9%. Please find the NPV of solution that the firm should adopt. [Hints/Example]
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