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Perit Industries has $ 1 5 5 , 0 0 0 to invest. The company is trying to decide between two alternative uses of the

Perit Industries has $155,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are:
Project A Project B
Cost of equipment required $ 155,000 $ 0
Working capital investment required $ 0 $ 155,000
Annual cash inflows $ 25,000 $ 57,000
Salvage value of equipment in six years $ 9,600 $ 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 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 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?

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