Question1 bell mountain vineyards is considering updating

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Reference no: EM13348507

Question:

1.) Bell Mountain Vineyards is considering updating its current manual accounting system with a high-end electronic system. While the new accounting system could save the company money, the cost of the system continues to decline. The Bell Mountain's opportunity cost of capital is 12.7 percent, and the costs and values of investments made at different times in the future are as follows:

Year       Cost       Value of Future Savings

(at time of purchase)

0              $5,000   $7,000  

1              4,450     7,000    

2              3,900     7,000    

3              3,350     7,000    

4              2,800     7,000    

5              2,250     7,000    

Determine the NPV of each choice. The NPV of each choice is:

a. NPV0 = $

b. NPV1 = $

c. NPV2 = $

d. NPV3 = $

e. NPV4 = $

f. NPV5 = $

g. Propose when should Bell Mountain buy the new accounting system?

Bell Mountain should purchase the system in (choose year) year 1, year 2, year 3, year 4, year 5

Reference no: EM13348507

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