Question
Maryville Environmental Services The success of Maryville Environmental Services depends on Mike and Tims capital investment decision. They must decide either to: (1) install a
Maryville Environmental Services The success of Maryville Environmental Services depends on Mike and Tims capital investment decision. They must decide either to: (1) install a new information technology system or (2) update the existing information technology system. Exhibit 1 contains information related to estimated costs and savings associated with the purchase of a new information technology system. Exhibit 2 contains information related to estimated costs and savings associated with the update of the existing information technology system.
- Assuming the company requires an 7% return from capital investments determine the net present value of the two alternatives. Discuss the advantages and disadvantages of using the net present value method to evaluate capital investment decisions. Based on the results of the calculated net present value, which investment would you recommend that Mike and Tim pursue?
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