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Pharoah 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
Pharoah 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 | System 200 | ||
0 | $1,420,300 | $1,453,800 | ||
1 | 261,910 | 670,700 | ||
2 | 427,630 | 627,500 | ||
3 | 504,740 | 443,100 | ||
4 | 689,100 | 304,400 |
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 100 is | $ | |
NPV of system 200 is | $ |
Which system should be chosen?
Pharoah should choose System 100 System 200 neither system both systems |
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