Perit Industries has $135,000 to invest. The company is trying to decide between two alternative uses...
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Perit Industries has $135,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project $ 135,000 $ 0 Project B $ 0 $ 135,000 $ 25,000 $ 63,000 $ 9,800 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 17%. Click here to view Exhibit 148-1 and Exhibit 14B-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 $135,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project $ 135,000 $ 0 Project B $ 0 $ 135,000 $ 25,000 $ 63,000 $ 9,800 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 17%. Click here to view Exhibit 148-1 and Exhibit 14B-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?
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Here are the calculations with steps shown 1 Net present value of Project A Cost of eq... View the full answer
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