ts eBook Perit Industries has $140,000 to invest. The company is trying to decide between two...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
ts eBook 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 $ 140,000 Project A $ 0 Project B $ 0 $ 140,000 $ 26,000 $ 9,700 $ 60,000 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%. Hint Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Print ferences 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? ts eBook 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 $ 140,000 Project A $ 0 Project B $ 0 $ 140,000 $ 26,000 $ 9,700 $ 60,000 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%. Hint Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Print ferences 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:
Posted Date:
Students also viewed these accounting questions
-
Julia Robertson is a senior at Tech, and she's investigating different ways to finance her final year at school. She is considering leasing a food booth outside the Tech stadium at home football...
-
Outdoors Inn expanded its tent-making operations later in the year. While still making the Double Inn tent, it is also making a larger tent, the Family Rolls, which has four rooms. The company can...
-
The Hull Petroleum Company and Inverted V are retail gasoline franchises that compete in a local market to sell gasoline to consumers. Hull and Inverted V are located across the street from each...
-
Do Lab 12 in this chapter's appendix, but for three-stage systems. Operation is at \(293 \mathrm{~K}, 1.0 \mathrm{~atm}, \mathrm{~F}=10 \mathrm{kmol} / \mathrm{h}\) and is \(10 \mathrm{~mol} \%\)...
-
The Louisiana Land and Cattle Company (LL&CC) is one of the largest cattle buyers in the country. It has buyers at all the major cattle auctions throughout the U.S. Southeast who buy on the companys...
-
Identify the way a company can profit with alternative possibilities in returns. Please evaluate the way and give your evaluation of the issue, will it work?
-
You are promised a series of cash flows with the first cash flow of $1000 starting next year. The cash flow will grow at a constant rate of 5% per year. You will receive a total of 10 annual cash...
-
The King Carpet Company has $3,110,000 in cash and a total of $11,430,000 in current assets. The firm's current liabilities equal $5,550,000 such that the firm's current ratio equals 2.1. The...
-
Explain the record storage requirements which must be followed to meet KindCare's organisational requirements and the Privacy Act. www.myworkplaces.com.au/j4r7d Explain the file naming conventions...
-
Describe the development of the political party system in Louisiana during the antebellum period. Discuss as fully as you can which each party stood for and what finally broke the parties apart....
-
eTablet was founded by Gregor Stavinslov in 2008 while at MIT in Boston, Massachusetts. Gregor was a highly skilled, disciplined professional with superior computer skills and knowledge, besides...
-
You will assume the role of "ethics consultant." You are expected to respond to all of the discussion issues listed below and write a memo that presents your arguments and conclusions to the ethics...
-
Corporations finance their operations using which of the following? a. Issuing common stock b. All of these choices are correct. c. Debt such as purchasing on account or issuing bonds or notes...
-
Prove the result that the R 2 associated with a restricted least squares estimator is never larger than that associated with the unrestricted least squares estimator. Conclude that imposing...
-
The following information is taken from the records of Cramer Corporation on March 31 of the current year. The accounts and balances needed to complete this problem are provided in the Working...
-
Use the working papers from Application Problem 20-2 to complete this problem. Instructions: Prepare a statement of cost of goods manufactured for Cramer Corporation. The statement is for the month...
-
The following information is taken from the records of Simmons Corporation on May 31 of the current year. The accounts and balances needed to complete this problem are provided in the Working Papers....
Study smarter with the SolutionInn App