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es Exercise 14-7 (Algo) Net Present Value Analysis of Two Alternatives [LO14-2] Perit Industries has $155,000 to invest in one of the following two projects:
es Exercise 14-7 (Algo) Net Present Value Analysis of Two Alternatives [LO14-2] Perit Industries has $155,000 to invest in one of the following two projects: Project A $ 155,000 Cost of equipment required Working capital investment required. Annual cash inflows Salvage value of equipment in six years. Life of the project 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? $0 $ 25,000 $ 9,600 Project B 6 years Project B $0 $ 155,000 $ 57,000 $0 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? 6 years
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