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Blossom Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive, and the cost of the new equipment and the
Blossom 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. The firm uses a 10 percent discount rate for their production systems. Year O 1 System 1 -$15,700 15,700 15,700 15,700 System 2 -$44,900 33,200 33,200 33,200 2 3 What are the payback periods for production systems 1 and 2? (Round answers to 2 decimal places, eg, 15.25.) Payback period of System 1 is years and Payback period of System 2 is years. If the systems are mutually exclusive and the firm always chooses projects with the lowest payback period, in which system should the firm invest? The firm should invest in Sunland Mills management is evaluating two alternative heating systems. Costs and projected energy savings are given in the following table. The firm uses 11.50 percent to discount such project cash flows. Year 0 1 System 100 -$2,334,100 279,710 398,330 616,340 912,600 System 200 -$1,847,200 869,100 474,200 650,500 428,200 2 3 4 What is the NPV of the systems? (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors and intermediate calculations. Round final answers to 0 decimal places, e.g. 5,275.) NPV of system 100 is $ NPV of system 200 is ta $ Which system should be chosen? Sunland should choose
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