Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Haas Trucking Company founded in 1985 provides safe and dependable freight services. Haas has $220,000 to invest in one of the two projects listed
Haas Trucking Company founded in 1985 provides safe and dependable freight services. Haas has $220,000 to invest in one of the two projects listed below. Cost of equipment required Working capital investment required Annual cash inflows Life of the project Project A Project B $220,000 $ $ 0 $220,000 $ 31,000 Salvage value of equipment in six years $ 9,200 6 years $ 53,000 $ 0 6 years The working capital needed for project B will be released at the end of six years for investment elsewhere. The company's discount rate is 15%. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) 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 B. (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? 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?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started