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Crawford Company has $225,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Cost of equipment
Crawford Company has $225,000 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 5 years Life of the project $ $ $ $ 225,000 - 55,000 20,000 5 years $ $ $ $ 135,000 90,000 55,000 10,000 5 years The working capital needed for Project B will be released at the end of 5 years for investment elsewhere. The company's discount rate is 10%. INSTRUCTIONS: 1) Compute the net present value of Project A. 2) Compute the net present value of Project B. 3) Which investment alternative (if either) would you recommend that the company accept
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