Exercise 13-7 Net Present Value Analysis of Two Alternatives LO13-2] Perit Industries has $100,000 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 A $100,000 $0 $21,000 $8,000 6 years Project B $0 $100,000 $16,000 $0 6 years The working capital needed for project B will be released at the end of six years for investment elsewhere. Pert Industries' discount rate is 14% Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. Required a. Calculate net present value for each project. (Negative amounts should be indicated by a minus sign. Use the appropriate table to determine the discount factor(s).) Now 2 4. Project A: Purchase of equipment Annual cash inflows Salvage value Total cash flows Discount factor (14%) Present value Net present value Project B Working capital invested Annual cash inflows Working capital released Total cash flows Discount factor (14%) Present value Net present value