Question: Could you solve this question please? Exercise 12-7 Net Present Value Analysis of Two Alternatives (L012-2] Perit Industries has $140,000 to invest. The company is

 Could you solve this question please? Exercise 12-7 Net Present Value
Could you solve this question please?

Exercise 12-7 Net Present Value Analysis of Two Alternatives (L012-2] Perit Industries has $140,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project Project A Project B $140,000 $ 0 0 $140,000 $ 23,000 $ 67,000 $ 8,500 $ 0 6 years 6 years The working capital needed for project will be released at the end of six years for investment elsewhere. Perit Industries' discount rate is 17%. Click here to view Exhibit 128-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project A. (Enter negative value with a minus sign. Round your final answer to the nearest whole dollar amount.) 2. Compute the net present value of Project B. (Enter negative value with a minus sign. Round your final answer to the nearest whole dollar amount.) 3. Which investment alternative (if either) would you recommend that the company accept? 1. Net present value project A 2. Net present value project B Which investment alternative (If either) would you 3. recommend that the company accept? Project A

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!