Question
IMF Industries has $ 265,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives follows Project A
IMF Industries has $ 265,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives follows
Project A Project B
Cost of equipment required $265,000
Working capital investment required $265,000
Annual Cash inflow $55,650 $ 42,400
Residue value of equipment in 8 years $21,200
Life of the project 8 Years 8 Years
The working capital needed for project B will be released at the end of eight years for investment elsewhere. The interest rate is 13%.
Which investment option would person suggest the company to accept please show sperate calculations and formals for each project using NPV method ?
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College Accounting A Contemporary Approach
Authors: David Haddock, John Price, Michael Farina
5th Edition
126078035X, 978-1260780352
