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Exercise 12-7 Net Present Value Analysis of Two Alternatives (L012-2] Perit Industries has $175,000 to invest. The company is trying to decide between two alternative

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Exercise 12-7 Net Present Value Analysis of Two Alternatives (L012-2] Perit Industries has $175,000 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 Project Project 5175,000 $ $ $175,000 $ 27.000 $44.000 $8,800 5 years The working capital needed for project will be released at the end of six years for investment elsewhere Perit Industries discount rate is 15% Click here to view Exhibit2- and Exhib128.2. to determine the appropriate discount factors using tables Required: 1 Compute the net present value of Project A (Enter negative value with a minus sign. Round your final answer to the nearest whole dollar amount.) 2. Compute the net present value of Project (Enter negative value 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 2 Net present value project Net present value project B Which investment alternative felther) would you recommend that the company accept? 3

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