Top Notch Limited has $750,000 to invest and is trying to decide between two alternative uses of the funds. The alternatives are as follows:    

The working capital needed for Project B will be released for investment elsewhere at the end of seven years. Top Notch uses a 20% discount rate.

Required:
Ignore income taxes. Which investment alternative (if either) would you recommend that the company accept? Show all computations using the net present value format. Prepare separate computations for each project.

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Cost of equipment required .... Working capital investment required. Annual cash inflows. . .. Salvage value of equipment in seven years Life of the project. ... $750,000 $750,000 $150,000 $210,000 $ 50,000 ..... 7 years 7 years