Blossom Corp. management is investigating two computer systems. The Alpha 8300 costs $2,448,125 and will generate...

90.2K

Verified Solution

Question

Finance

Blossom Corp. management is investigating two computer systems.The Alpha 8300 costs $2,448,125 and will generate cost savings of$1,253,325 in each of the next five years. The Beta 2100 systemcosts $3,387,500 and will produce cost savings of $921,750 in thefirst three years and then $2 million for the next two years. Thecompany’s discount rate for similar projects is 14 percent. What isthe NPV of each system? (Enter negative amounts using negativesign, e.g. -45.25. Do not round discount factors. Round otherintermediate calculations and final answer to 0 decimal places,e.g. 1,525.) NPV of Alpha system

Answer & Explanation Solved by verified expert

4.1 Ratings (418 Votes)

Net Present Value NPV of Alpha System Year Annual Cash Flow Present Value factor at 14 Present Value of Cash Flow 1 1253325 0877193 1099408 2 1253325 0769468 964393 3 See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

Blossom Corp. management is investigating two computer systems.The Alpha 8300 costs $2,448,125 and will generate cost savings of$1,253,325 in each of the next five years. The Beta 2100 systemcosts $3,387,500 and will produce cost savings of $921,750 in thefirst three years and then $2 million for the next two years. Thecompany’s discount rate for similar projects is 14 percent. What isthe NPV of each system? (Enter negative amounts using negativesign, e.g. -45.25. Do not round discount factors. Round otherintermediate calculations and final answer to 0 decimal places,e.g. 1,525.) NPV of Alpha system