Question: Oriole Mills management is evaluating two alternative heating systems. Costs and projected energy savings are given in the following table. The firm uses 11.50 percent

Oriole Mills management is evaluating two alternative heating systems. Costs and projected energy savings are given in the following table. The firm uses 11.50 percent to discount such project cash flows.

Year System 100 System 200
0 $1,993,000 $1,717,300
1 243,810 862,000
2 607,730 583,900
3 773,740 558,200
4 977,200 342,300

What is the NPV of the systems? (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors and intermediate calculations. Round final answers to 0 decimal places, e.g. 5,275.)

NPV of system 100 is $
NPV of system 200 is $

Which system should be chosen?

Oriole should choose

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