1) Sunhill Vineyards is considering updating its present manual accounting system with high-end electronic system. Whereas new accounting system would save company money, cost of system continues to refuse. Sunhill’s opportunity cost of capital is 12.1%, and costs and values of investments made at different times in the future are given:

Year    Cost      Value of Future Savings (at time of purchase)
 0      $5,000          $7,000
 1      $4,600          $7,000
 2      $4,200          $7,000
 3      $3,800          $7,000
 4      $3,400          $7,000
 5      $3,000          $7,000

Compute NPV of each choice.

The NPV of each choice is:

i) NPV0 = $
ii) NPV1 = $
iii) NPV2 = $
iv) NPV3 = $
v) NPV4 = $
vi NPV5 = $

Propose when must Sunhill Mountain buy new accounting system?

Sunhill must buy system in what year?

Requirements
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