Current Attempt in Progress Oriole Incorporated management is considering investing in two alternative production systems. The...

  

Transcribed Image Text:

Current Attempt in Progress Oriole Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive, and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. The firm uses a 8 percent discount rate for production systems. Year System 1 0 1 2 3 -$15,490 15,519 15,519 15,519 IRR of system 1 is System 2 -$48,504 Which has the higher IRR? 33,010 33,010 Compute the IRR for both production system 1 and production system 2. (Do not round intermediate calculations. Round answers to 2 decimal places, e.g. 15.25%.) 33,010 has higher IRR. % and IRR of system 2 is %. Compute the NPV for both production system 1 and production system 2. (Do not round intermediate calculations. Round answers to 2 decimal places, e.g. 15.25.) NPV of system 1 is $ Which production system has the higher NPV? Save for Later has higher NPV. and NPV of system 2 $ Attempts: unlimited Submit Answer Current Attempt in Progress Oriole Incorporated management is considering investing in two alternative production systems. The systems are mutually exclusive, and the cost of the new equipment and the resulting cash flows are shown in the accompanying table. The firm uses a 8 percent discount rate for production systems. Year System 1 0 1 2 3 -$15,490 15,519 15,519 15,519 IRR of system 1 is System 2 -$48,504 Which has the higher IRR? 33,010 33,010 Compute the IRR for both production system 1 and production system 2. (Do not round intermediate calculations. Round answers to 2 decimal places, e.g. 15.25%.) 33,010 has higher IRR. % and IRR of system 2 is %. Compute the NPV for both production system 1 and production system 2. (Do not round intermediate calculations. Round answers to 2 decimal places, e.g. 15.25.) NPV of system 1 is $ Which production system has the higher NPV? Save for Later has higher NPV. and NPV of system 2 $ Attempts: unlimited Submit Answer

Answer rating: 100% (QA)

do 0 Given dQ Therefore the total scattering c... View the full answer