Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 15E: Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided...
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Blossom Corp. management is investigating two computer systems. The Alpha 8300 costs $2,821,325 and will generate cost savings of $1,280,625 in each of the next five years. The Beta 2100 system costs $4,610,500 and will produce cost savings of $954,750 in the first three years and then $2 million for the next two years. The company’s discount rate for similar projects is 14 percent.
What is the
Should Blossom Choose the Alpha or Beta system?
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