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
Min Pages: 1