Question
The cookies bakery company managerial accountant considers the purchase of a new convection oven system. a preferred vendor offers two plausible options, the tech-smart convection
The cookies bakery company managerial accountant considers the purchase of a new convection oven system. a preferred vendor offers two plausible options, the tech-smart convection system and the perfection convection solution series 3. both convection systems have a useful life of 12 year. the tscs requires an initial investment of 250,000$ whereas the pcs3 requires an initial investment of $330,000. The energy efficient technology of the TSCS is projected to increase total revenue $38,000 annually while the precise production capability of the PCS3 is projected to increase revenue $52,000 annually. The managerial accountant plans to invest the cast inflow in an annuity yielding 8%. Compare the net present value of each new system and state which investment is more beneficial to Cookies Bakery Company.
Present Value of $1
Periods 8%10%
12.397.319
13.368.290
Present Value of Annuity of $1
Periods 8%10%
127.5366.814
137.9047.103
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