Exercise 14-7 (Algo) Net Present Value Analysis of Two Alternatives (L014-2) Perit Industries has $130,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are Project A Cost of equipment required Projects $ 130,000 50 Working capital investment required $0 $ 130.000 Annual cash intloan $ 22,000 $ 33, 000 Silvage value of equipment in six years $ 8.300 $0 Life of the project 6 years 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 14% Click here to view Exhibit 148-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. 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? The working capital needed for project will be released at the end of six years for investment elsewhere. Perit Industries' discount rate is 14% Click here to view Exhibit 14B-1 and Exhibit 148-2, to determine the appropriate discount factor(s) using tables 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 $ 55,000 2. Net present value project B S 55,000 3. Which investment alternative (if either) would you Project B recommend that the company accept? XHIBIT 14B-1 resent Value of $1:1(1) BBC Game 5% Periods 4% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25 1 0.962 0.952 0.943 0.935 0.926 0,917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.8330,826 0.820 0.8130.806 0.8 2 0.925 0.907 0.890 0.873 0.857 0.842 0.826, 0.812 0.797 0.783 0.769 0.756 0.743 0,731 0.718 10.706 0.694 0.633 0.672 0.661 0,650 0.6 3 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0,675 0,658 0,641 0,624 0,609 0.593 0.579 0.564 0.551 0.537 0.524 0.5 4 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.6130.592 0.572 0.5520.534 0.516 0,499 0.482 0.467 0.451 0437 0.42304 5 0,8220.784 0.747 0.713 0,681 0.650 0.621 0.593 0.567 0.54305190.497 0.476 0.456 0.437 0.419 0.402 0.386 0.370 0.355 0.34103 6 0.790 0.746 0.705 0.666 0,630 0.596 0.564 0.535 0.507 0:480 0.456 0.432 0.410 0.390 0.370 0.352 0.335 0.319 0.3030.289 0.275 0.2 7 0.760 0.7110.665 0.623 0.5830.547 0.513 0.482 0.452 0.425 0.400 0.376 0.354 0.333 0,314 0.296 0.279 0.263 0.2490.235 0.222 0.2 8 0.731 0.677 0.627 0.5820.540 0.502 0.467 0.434 0,404 0.376 0.3510.3270.305 0.285 0.266 0.2490.233 0.218 0.2040.191 0.179 0.1 9 0.703 0.645 0.592 0.544 0.500 0.460 0.424 0.391 0.361 0.333 0.308 0.284 0.263 0.243 0.225 0.209 0.194 0.180 0.167 0.155 0.144 0.1 10 0.676 0.614 0.558 0.508 0,463 0.422 0.386 0.352 0.322 0.295 0.270 0.247 0.227 0.208 0.19 0.176 0.162 0.149 0.137 0.126 0.116 0.1 11 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0.215 0.195 0.178 0.162 0.148 0.135 0.123 0.112 0.1030.094 0,0 12 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0.286 0.257 0.231 0.208 0.187 0.168 0.152 0.137 0.124 0.112 0.1020.092 0.083 0.076 0.0 13 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.258 0.229 0.204 0.182 0.1630.145 0.130 0.116 0.104 0,093 0.084 0.075 0.068 0.061 0.0 14 0.577 0.50 0.442 0.388 0.299 0.263 232 0205 0.18 0.125 0.1110.099 0.088 0.078 0.069 0.062 0.055 0.049 00 15 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.209 0.183 0.160 0.140 0.123 0.108 0.095 0,084 0.074 0.065 0.057 0.051 0.045 0.040 00 16 0.534 0.458 0.394 0.3390.292 0.252 0.218 0,188 0.163 0.141 0.123 0.107 0.093 0.081 0.071 0.062 0.054 0.047 0.042 0.036 0.032 0.0 17 0.513 0.436 0.371 0.317 0.270 0.231 0.198 0.170) 0.146 0.125 0.108 0.093 0.080 0.069 0.050 0.052 0.045.0.039 0.034 0.030 0.026 0.0 18 0.494 0.416 0.350 0.296 0.250 0.212 0.180 0.153 0.130 0.11 0.095 0.081 0.069 0.059 0.051 0.044 0.038 0.032 0.028 0.024 0.021 00 19 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.138 0.116 0.098 0.083, 0.070 0.060 0.051 0.043 0.037 0.031 0.027 0.023 0.020 0.017 0.0 20 0.456 0.377 0.312 0.258 0.215 0.178 0.149.0.124 0.104 0.087 0.073 0.061 0.051 0.043 0.037 0.031 0.025 0.022 0.019 0.016 0.014 00 21 0.439 0.359 0.294 0.2420.1990.164 0.135 0.112 0.093 0.077 0.064 0.053 0.044 0.037 0.031 0.026 0.022 0.018 0,015 0,013 0.01100 G A3.0 EXHIBIT 14B-2 Present Value of an Annuity of $1 in Arrears: 1711-1(1+)n] Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25 1 0.962 0.952 0.943 0.935 0.9260.917 0.909 0.901 0.8930.885 0.877 0.870 0.862 0.855 0.847 0.840 0.8330.826 0.820 0.8130,806 0.8 2 1.886 1.859 1.8331.808 1.783 1.759 1.736 1.713 1.690 1.668 1.647 1.626 1605 1.585 1.566 1.547 1.528 1.509 1492 1.474 1.457 1.4 3 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.444 2.402 2.361 2322 2.283 2246 2210 2.174/2140 2106 2074 2.042 2011 1.981 1.9 4 3.630 3.546 3.465 3.387 3.312 3.240 3.1703.102 3.037 2.9742.914 2.855 2.798 2.743 2.690 2.639 2589 2.540 2.494 2448 240423 5 4.452 4.329 4212 4.100 3.993 3.890 3.791 3.696 3.605 3517 3.433 3.352 3.274 3.1993.127 3.058 2.991 2926 2.864 2.803 2745 26 6 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.231 4.111 3.998 3.8893.784 3.685 3.589 3.498 3.410 3.326 3.245 3.167 3.092 3.02029 7 6.002 5.786 5.582 5.389 5.206 5.033 4.868 | 4.712 4.564 4.42342884.160 4.039 3.9223.8123.706 3.605 3.508 3.416 3.327 3.242 3.1 8 6.733 6.463 6.210 5.971 5.747 5.535 5.335 5.146 4.968 4.799 4.639 4.487 4 344 4.207 4.078 3.954 3.837 3.726 3.619 3.518 3.421 3.3 9 7.435 7.108 6.802 6.515 6.247 5.9955.759 5.537 5.3285.132 4.946 4.772 4.607 4.4514.303 4.163 4031 3.905 3.786 3.6733.566 3.4 10 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.889 5.650 5.426 5.216 5.019 4.833 4.659 4494 43394.1924.054 3.9233.799 3.682 3.5 11 8.760 8.306 7.887 7.499 7.139 6,805 6.495 6.207 5.938 5.687 5.453 5.234 5.029 4,836 4.656 4.486 4.327 4.177 4.035 3.902 3.776 3.6 12 9.385 8.8638.384 7.9437.536 7.1616.814 6.4926.1945.918 5.660 5.4215.197 4.988 4.79346114.439 4278 4.127 3.985 3.851 3.7 13 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.750 6.424 6.122 5.842 5.583 5.3425.118 4910 4.715 4533 4.362 4.203 4.053 3.912 3.7 14 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.982 6.628 6.302 6.0025.724. 5.468 5.2295.000 4.802 4.611 4432 4.265 4.108 3.962 2.8 15 11.11810.380 9.7129.108 8.5598.061 7.6067.1916,811 6.462 6.142 5.847 5.575 5.324 5.092 4.87 4.675 4.489 4.315 41534.0013.8 16 11.652 10.838 10.106 9.447 8.851 8.313 7.824 7.379 6.974 6,604 6.265 5.954 5.668 5.405 5.162 4939 4730 4.536 4357 41894033 3.8 17 12.166 11.274 10.4771 9.763 9.122 8.544 8.0227.549 7.1206.729 6.373 6.047 5.749 5.475 5.222 4.990 4.775 4.576 4.391 4219 4,059 3.9 18 12.659 11.690 10.828 10.059 9.372 8.756 8.2017.702 7.250 6.840 6.457 6.128. 5.818 5.534 5.273 5.033 4.812 4608 4419 4.2434080 3.9 19 13.13412085 11.158 10.336 9.604 8.950 8.365 7.8397.366 6.938 6.550 6.198 5.877 5.584 5.316 5.070 4.843 4.635 4442 4.263 4.097 3.9 20 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.963 7.469 7.025 6.623 6.259. 5.9295.628 5.353 5.101 4.870 4.65714460 4.279 4.110 3.9 21 14.029 12.821 11.764 10.836 10.017 9.292 8.649 8.075 7.562 7,102 6.687 6:312 5.973 5.665 5.384 5.127 4.891 4.675 4.476 4.292 4121 3.9 22 114.451 13.163.12042 11.061.10.2011 9.44287728.17676451 7.170 6.74316.359 1601115.696 5.410 5.149:14.909 4690|14.483 4302413013:9