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Mr. Sushi, the chief gourmet cook at a specialty restaurant needs to make a decision between two investment alternatives. First investment is to invest on
Mr. Sushi, the chief gourmet cook at a specialty restaurant needs to make a decision between two investment alternatives. First investment is to invest on Three Small Ovens and second investment is to invest on Two Large Ovens. Mr. Sushi asked the operations manager to provide necessary information for evaluating the two alternatives. After some questioning of vendors and receipt of necessary specifications, relevant attributes and costs are shown in the following table Initial Cost Labor cost per year in excess of larger models Maintenance cost per year Salvage value Three Small Ovens at $1,300 Each Two Large Ovens $3,900 $690 (total) at $2,500 Each $5,000 $0 $750 ($250 each) $400 ($200 each) $810 ($270 each) $1,200 ($600 each) It is assumed that a) the life of each oven is 5 years, and b) the company thinks it knows how to make 10% on investments no more risky than this one. From the above information, the NPV for Three Small Ovens = $(round your response to two decimal places and include a minus sign if the answer is negative). Initial Cost Labor cost per year in excess of larger models Maintenance cost per year Salvage value at $1,300 Each $3,900 at $2,500 Each $5,000 $0 $690 (total) $750 ($250 each) $400 ($200 each) $810 ($270 each) $1,200 ($600 each) It is assumed that a) the life of each oven is 5 years, and b) the company thinks it knows how to make 10% on investments no more risky than this one. From the above information, the NPV for Three Small Ovens = $(round your response to two decimal places and include a minus sign if the answer is negative) From the above information, the NPV for Two Large Ovens = $(round your response to two decimal places and include a minus sign if the answer is negative) Using the net present value (NPV) method as the basis of comparing the investments. Mr. Sushi would recommend
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