Question
Cullumber Mills management is evaluating two alternative heating systems. Costs and projected energy savings are given in the following table. The firm uses 11.50
Cullumber 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 System 100 -$1,929,700 0 2 3 292,310 570,230 707,340 838,000 NPV of system 100 is System 200 -$1,943,100 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 200 is $ 899,300 599,700 655,600 397,700 $ Which system should be chosen?
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Fundamentals of corporate finance
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
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