Whichever one is chosen will be renewed indefinitely at the


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.)

Request for Solution File

Ask an Expert for Answer!!
Finance Basics: Whichever one is chosen will be renewed indefinitely at the
Reference No:- TGS0631161

Expected delivery within 24 Hours