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Cullumber Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive, and the cost of the new equipment and
Cullumber 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 7 percent discount rate for production system projects. Year System 1 System 2 0 -$14,700 -$42,700 1 14,700 31,000 2 14,700 31,000 3 14,700 31,000 Calculate NPV. (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors. Round answers to 2 decimal places, e.g. 15.25.) NPV of System 1 is $ In which system should the firm invest? The firm should invest in and NPV of System 2 is $
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