Question
MapleTree Industries has $ 265,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives follows Project A
MapleTree 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. Canada Fair Market interest rate is 13% Required: Which Investment option would you recommend the company to accept? Please show separate calculations and formulas for each project using the NPV method.
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