Perit Industries has $115,000 to invest in one of the following two projects: Cost of equipment...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Perit Industries has $115,000 to invest in one of the following two projects: Cost of equipment required Working capital investment required Annual cash inflows Project A $ 115,000 $ 0 Project B $ 0 Salvage value of equipment in six years $ 21,000 $ 8,700 $ 115,000 $ 69,000 Life of the project 6 years $ 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 15%. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project A. Note: 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. Note: 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 $115,000 to invest in one of the following two projects: Cost of equipment required Working capital investment required Annual cash inflows Project A $ 115,000 $ 0 Project B $ 0 Salvage value of equipment in six years $ 21,000 $ 8,700 $ 115,000 $ 69,000 Life of the project 6 years $ 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 15%. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project A. Note: 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. Note: 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:
Posted Date:
Students also viewed these accounting questions
-
To help managers make decisions among alternative courses of action, managerial accountants help with __________. ANSWER Unselected defining business goals Unselected preparing the financial...
-
Within the context of financial reporting, the treatment of depreciation plays a pivotal role in reflecting the true economic value of a company's assets. Depreciation is the systematic allocation of...
-
SnowBunny Company purchased a gondola for $440,000 (no residual value) at the beginning of 2018. The gondola was being depreciated over a 10-year life using the double-declining method. At the...
-
Explain how the structure of the balance sheet corresponds to the accounting equation.
-
Describe the advantages and disadvantages of buying term insurance and investing the difference.
-
The data set BWGHT.RAW contains data on births to women in the United States. Two variables of interest are the dependent variable, infant birth weight in ounces (bwght), and an explanatory...
-
Identify the differences between the three alternative cost bases of an absorption-costing system: actual, normal, and standard.
-
Dennise Geary started an interior design company called Interiors by Dennise, Inc., on November 1, 2012. The following amounts summarize the financial position of her business on November 14, 201 2,...
-
Colorado has the following overhead costs and cost drivers. Direct labor hours are estimated at 100000 for the year. The following information is available regarding activity cost pools, cost...
-
At the beginning of 2022, Donna Harp was employed as a cinematographer by Farah Movie, Inc., a motion picture company in Los Angeles, California. In June, she accepted a new job with Ocala Production...
-
Bertie sold the following assets during the year. Item Purchase... Bertie sold the following assets during the year. Item House Shares #1 Office Building Land Shares #2 Purchase Date 7.6.94 2.7.97...
-
Identify the types of auditing procedure that may be used to obtain evidence. For each procedure indicate one type of audit evidence that is obtained.
-
List the types of controls that expanded audit tests might address.
-
A variety of specific auditing procedures for obtaining audit evidence is listed below. 1. Send debtors confirmation letters to a number of the entitys customers. 2. Recompute depreciation charges....
-
In general, how would you compare the relative responsibilities of the audit director, the audit team leader, and the audit staff assigned to an internal audit?
-
Discuss the interrelationship between management assertions and the specific audit objectives developed for an entity.
-
S material on any commencal websites is a violation of my co 1/1/2010: Subsidiary was formed; Ex. Rate was 0.50-0.52. in reported Licword utwestbury.edu. Unauthorized 1/1/2015: Exchange rate was 0.60...
-
Bobbie Singh provides writing services for small businesses. He blogs for companies that need professionally written content. His business records at November 15, 2023, are shown below: During the...
-
Feng Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $42,300. The machines useful life is estimated at 10 years, or 363,000 units of...
-
In early January 2004, LabTech purchases computer equipment for $147,000 to use in operating ac tivities for the next four years. It estimates the equipments salvage value at $30,000. Prepare tables...
-
Cemer Manufacturing purchases a large lot on which an old building is located as part of its plans to build a new plant. The negotiated purchase price is $225,000 for the lot plus $120,000 for the...
Study smarter with the SolutionInn App