Sheridan Mills management is evaluating two alternative heating systems. Costs and projected energy savings are given in the following table. The firm uses 11.50 percent to discount such project cash flows.Year System 100 System 2000 –$1,982,100 –$1,854,2001 206,910 763,7002 429,830 589,8003 743,040 671,9004 1,046,900 426,300What is the NPV of the systems? (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors and intermediate calculations. Round final answers to 0 decimal places, e.g. 5,275.)

solution NPV = present value of cash inflow - present value of cash outflow discount rate =11.5%…

Answered: heridan Mills management is evaluating…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 18EA: Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and...

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Sheridan Mills management is evaluating two alternative heating systems. Costs and projected energy savings are given in the following table. The firm uses 11.50 percent to discount such project cash flows.

Year	System 100	System 200
0	–$1,982,100	–$1,854,200
1	206,910	763,700
2	429,830	589,800
3	743,040	671,900
4	1,046,900	426,300

What is the NPV of the systems? (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors and intermediate calculations. Round final answers to 0 decimal places, e.g. 5,275.)

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