Question
MUTUALLY EXCLUSIVE PROJECTS WITH EQUAL LIVES A company is evaluating if it is convenient to make changes in its accounting department. Its MARR is 15%
MUTUALLY EXCLUSIVE PROJECTS WITH EQUAL LIVES A company is evaluating if it is convenient to make changes in its accounting department. Its MARR is 15% per year. The current expenses of the accounting department amount to $180,000 per year. An option is to outsource the companys accounting to an outside company that will charge $150,000 per year. Another option is to purchase a new accounting system and make a restructure of the department which will result in savings of $65,000 per year. The investment needed for the system and restructure is $120,000. a) Using a study period of 10 years, what should the company do? Use NPV b) Using a study period of 5 years, what should the company do? Use NPV
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