Perit Industries has $100,000 to invest. The company is trying to decide between two alternative uses...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Perit Industries has $100,000 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 $ 100,000 $ 0 $ 21,000 Project B $ 0 $ 100,000 $ $ 8,000 6 years 16,000 $ 0 6 years 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 12B-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 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? 1. Net present value project A 2. Net present value project B 3. Which investment alternative (if either) would you recommend that the company accept? Perit Industries has $100,000 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 $ 100,000 $ 0 $ 21,000 Project B $ 0 $ 100,000 $ $ 8,000 6 years 16,000 $ 0 6 years 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 12B-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 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? 1. Net present value project A 2. Net present value project B 3. Which investment alternative (if either) would you recommend that the company accept?
Expert Answer:
Related Book For
Managerial Accounting
ISBN: 978-0077522940
15th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
Students also viewed these accounting questions
-
L-keys, such as the one shown in the figure below, are commonly used to insert screws and bolts in medical implants. This insertion process can be simplified into the loading scenario shown in the...
-
Dana Dodson died October 31, 2013, with a gross estate of $6.7 million, debts of $200,000, and a taxable estate of $6.5 million. Dana made no adjusted taxable gifts. All of her property passed under...
-
Maher Inc. reported income from continuing operations before taxes during 2020 of $790,000. Additional transactions occurring in 2020 but not considered in the $790,000 are as follows. 1. The...
-
Refer to the information in Exercise 16-12. Prepare a process cost summary using the FIFO method. (Round cost per equivalent unit calculations to two decimal places.) Data From Exercise 16-12 The...
-
Terry Industries produces two electronic decoders, P and Q. Decoder P is more sophisticated and requires more programming and testing than does Decoder Q. Because of these product differences, the...
-
Topic : SQL DDL & DML Purpose The purpose of this assignment is to help you learn more about SQL. Brief Introduction SQL is a domain-specific language used in programming and designed for managing...
-
Write program that simulates the rolling of a single 6-sided die a hundred times. You can use the rand() library function as is demonstrated in section 3.9 (feel free to look at the slides in chapter...
-
Requirements 1. What is the cost of direct materials used? 2. What is the cost of indirect materials used? 3. What is the cost of direct labor? 4. What is the cost of indirect labor? 5. What is the...
-
In December 20X6, snowed collapsed the roof on Nordac's building. Snow storms have regularly caused similar damage to businesses in Nordac's area. Nordac's insurance covered 80% of the damage and...
-
Two loads Z1=100+j0 (Ohms) and Z2=10+j20 (Ohms) are connected across a 200 V rms, 60 Hz source. (20 points) a) Find the total real, reactive power and power factor b) Find the capacitor var required...
-
Many businesses such as fast food restaurants and coffee shops have Customer Loyalty Programs that reward you for purchasing their products or using their services. These programs are based on...
-
Expand or multiply the following algebraic expression 4.1 (-g-8)2 g + 169 +64 4.2 (a-3)(a- 4) (2a - 1) Question 5 Divide the following algebraic expression: 2k3+7k + 2k +9 2k +3
-
The data given in the following table represent experimental, frequency response data for a process consisting of a first-order process and a transportation lag. Determine the time constant and the...
-
The figure shows a bolted lap joint that uses SAE grade 8 bolts. The members are made of cold-drawn AISI 1040 steel. Find the safe tensile shear load F that can be applied to this connection if the...
-
Refer to the data for Beech Corporation in Exercise 812. The company is considering making the following changes to the assumptions underlying its master budget: In Exercise 812 Beech Corporation is...
-
Refer to the data for Minden Company in Problem 817. The company is considering making the following changes to the assumptions underlying its master budget: In Problem 817 Minden Company is a...
-
Koontz Company manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May. The production superintendent was pleased when...
-
Portugal has a progressive personal income tax system. In 2016, tax rates on taxable income were \(14.5 \%\) on the first \( 7,035,21 \%\) on the next \( 13,065,37 \%\) on the next \( 20,100,45 \%\)...
-
In its 2016 International Tax Competitiveness Index report, the U.S.-based Tax Foundation ranked Estonia as having the most competitive tax system in the OECD, based in part on its \(20 \%\) flat tax...
-
A lump-sum tax is a fixed amount of tax per person. If a lump-sum tax, \(T\), raises the same amount of revenue for the government as a tax on earnings at the rate, \(t\), then \(t w H=T\), where...
Study smarter with the SolutionInn App