The company XYZ needs to acquire a new operating system. They received two bids for two different providers. System A has a 6-year life, but it is expensive, while system B is less expensive but has to be replaced after 3 years. The cost of purchasing both system and the cost of operating them annually over their expected lives are as following:

Year System A System B

0 (95,000) (55,000)

1 (4,000) (5,000)

2 (4,000) (4,000)

3 (4,000) (3000)

4 (2,000)

5 (2,000)

6 (2,000)

Conduct an analysis to evaluate this investment and recommend the system that the company should acquire. The required rate of return is 12 percent.