Miller 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.)NPV of system 100 is $ NPV of system 200 is $ Which system should be chosen?Sheridan should chooseSystem 100, System 200, neither, or both

Calculation of NPV: System 100 Time Cash Flows Present Value Factor (11.50%) Present…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Miller 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.)

NPV of system 100 is		$
NPV of system 200 is		$

Which system should be chosen?

Sheridan should choose

System 100, System 200, neither, or both

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