Question: E Mart is considering purchasing a new inventory control system featuring state-of-the-art technology. Two vendors have submitted proposals to supply E Mart with the

E Mart is considering purchasing a new inventory control system featuring state-of-the-art

E Mart is considering purchasing a new inventory control system featuring state-of-the-art technology. Two vendors have submitted proposals to supply E Mart with the new system. The system offered by Vendor C requires an initial outlay of $325,000 and has a useful life of 7 years. The expected cash inflows from the system are $65,000 for each of the 7 years. Vendor D has proposed to sell E Mart a system that will require an initial outlay of $140,000 and has an 7-year life. Vendor D's system is expected to provide cash inflows to E Mart of $42,000 per year for the 7 years. e. Calculate the net present value (NPV) of each system if E Mart's required rate of return is 11.5%. What is the NPV for Vendor D? Show answer to 2-decimal points [XX.XX].

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!