Cupcakeshop is looking at two different inventory control, Ask an Expert

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Cupcakeshop is looking at two different inventory control systems. LIFO costs $750,000, lasts 5 years and results in annual OCF of ($85,000). FIFO costs $980,000, lasts 7 years and results in annual OCF of ($75,000). Whichever one is chosen will be renewed indefinitely at the same cost and same OCF. Using a required return of 15%, which system should be chosen? (Show the numbers used to derive the answer.)

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9871793

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