# Bell Mountain Vineyards

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## Description

1.) Bell Mountain Vineyards is considering updating its current manual accounting system with a high-end electronic system. While the new accounting system would save the company money, the cost of the system continues to decline. The Bell Mountainâ€™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
Calculate the NPV of each choice. (Round answers to the nearest whole dollar, e.g. 5,275.)
The NPV of each choice is:

a. NPV0 = \$

b. NPV1 = \$

c. NPV2 = \$

d. NPV3 = \$

e. NPV4 = \$

f. NPV5 = \$

g. Suggest 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

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