Ace is evaluating the following 2 inventory systems. A supplier has offered a discount for buying larger inventory quantities on shorter credit terms. The analysis follows: Present System Order Number Delivered At Order Quantity Inventory Cost Payment Due Att PVF PV 1 0 30,000 $1,500,000 30 0.991847826 $1,487,772 2 40 30,000 70 0.981182796 $1,471,774 3 80 30,000 $1,500,000 $1,500,000 $45,000 110 0.970744681 $1,456,117 120 0.968169761 ORDERING COSTS HOLDING COSTS $43,568 $60,000 120 0.968169761 $58,090 $4,517,321 Proposed System Order Number Delivered At Order Quantity Inventory Cost Payment Due Att. PVF PV 1 0 45,000 5 0.99863 2011 $2,201,984 2 60 45,000 65 0.982503365 $2,205,000 $2,205,000 $30,000 $90,000 $2,166,420 ORDERING COSTS 120 0.968169761 $29,045 HOLDING COSTS 120 0.968169761 $87,135 $4,484,584 The firm should select: System B since it has the lower NPV System A since it has the higher NPV Based on the data presented, it is fair to say that: The quantity discount more than offsets the shorter DSO and higher holding costs We should forgo the discount since we are better off keeping our cash longer