Question
Crane Corp. management is investigating two computer systems. The Alpha 8300 costs $2,706,625 and will generate cost savings of $1,033,725 in each of the next
Crane Corp. management is investigating two computer systems. The Alpha 8300 costs $2,706,625 and will generate cost savings of $1,033,725 in each of the next five years. The Beta 2100 system costs $2,940,500 and will produce cost savings of $1,287,750 in the first three years and then $2 million for the next two years. The company's discount rate for similar projects is 14 percent. What is the NPV of each system?
(Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to 0 decimal places, e.g. 1,525.)
NPV of Alpha system
NPV of Beta system
Which one should be chosen based on the NPV?
Crane should chose which one alpha 8300 or beta 2100?
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