Question: Crane Corp. management is investigating two computer systems. The Alpha 8300 costs $2,638,025 and will generate cost savings of $1,044,125 in each of the next

Crane Corp. management is investigating two computer systems. The Alpha 8300 costs $2,638,025 and will generate cost savings of $1,044,125 in each of the next five years. The Beta 2100 system costs $2,910,500 and will produce cost savings of $1,121,750 in the first three years and then $2 million for the next two years. The companys discount rate for similar projects is 14 percent. What is the NPV of each system? (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to 0 decimal places, e.g. 1,525.)

NPV of Alpha system

NPV of Beta system

Which one should be chosen based on the NPV? Beta or Alpha

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!