OSB Ltd. Wants to buy a new digital projection system. Two models are available as follows: Both models are expected to boost revenue by $20,000/year. System 1 will last 3 years and cost $2,000 per year to operate. Its initial cost is $8,000. System 2 will last 4 years and cost $2,750 per year to operate. 

Its initial cost is $8,600 dollars. Ignore taxes and assume a discount rate of 10%.

Assuming OSB needs only one system for its ongoing operations, which model should it purchase?

Answer rating: 100% (QA)

To determine which model OSB Ltd should purchase we need to compare the net present value NPV of the ... View the full answer