NOTE: Annual cash net flow should be multiplied by PVF for annuity

EXERCISE 137 Net Present Value Analysis of Two Alternatives Perit Industries has $100,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: 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%. Project A Project B Cost of equipment required ............. Working capital investment required ....... Annual cash inflows... Salvage value of equipment in six years ........ Life of the project .... $100,000 $0 $21,000 $8,000 6 years $0 $100,000 $16,000 20,000 6 years Required: Which investment alternative (if either) would you recommend that the company accept? Show all computations using the net present value format. Prepare separate computations for each project Note: This Question should be answered by annual cash net flow, should be muliplied by PVF for annuity