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A company must implement one of two systems. System 1 will cost the company $8,000, will have a 4 year life, a salvage value of $850, and pre-tax operating costs of $500 per year. System 2 will cost the company $8,700, have a 5 year life, a salvage value of $925, and pre-tax operating costs of $475 per year. System 1 and system 2 have a CCA rate of 30% per year, the company's discount rate is 15% and the tax rate is 40%. The systems will be replaced at the end of their useful life.

Calculate the Net Present Value for each system.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92415238

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