Question: Exercise 14-7 (Static) Net Present Value Analysis of Two Alternatives [LO14-2] Perit Industries has $100,000 to invest. The company is trying to decide between two


Exercise 14-7 (Static) Net Present Value Analysis of Two Alternatives [LO14-2] Perit Industries has $100,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit industries' discount rate is 14%. Click here to view Exhibit 148-1 and Exhibit 148-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project A. (Enter negative values 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 values 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? FXHIBIT 14E-1 Present Valae of $1:(1+r)n1 EXHIBIT 14B-2 Preseot Value of an Annuity of \$1 in Arrears: p111(1+)21]
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
