Problem 9.14

Champlain Corp. management is investigating two computer systems. The Alpha 8300 costs $3,243,425 and will generate cost savings of $1,302,825 in each of the next five years. The Beta 2100 system costs $3,671,500 and will produce cost savings of $1,054,750 in the first three years and then $2 million for the next two years. If the companys discount rate for similar projects is 14 percent: What is the NPV for the two systems? (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors. Round answers to 0 decimal places, e.g. 5,275.)

NPV of Alpha system$ ____________
NPV of Beta system $ ____________

Which one should be chosen based on the NPV?

Champlain should chose the Beta 2100 or Alpha 8300 System.