Perit Industries has $120,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A $ 120,000 Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project Project B $ 0 $ 120,000 $ 70,000 $ 0 $ 22,000 $ 8,800 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 14%. 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? 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? EXHIBIT 12B-1 Present Value of Sl: 1 (1+rn 11% 16% 0.797 0.516 0.499 0.507 0.205 Periods 1 2 3 4 5 6 7 3 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 40 4% 5% 6% 7% 8% 9% 10% 12% 13% 14% 15% 17% 18% 19% 20% 21% 22% 23% 24% 25% 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 | 0.813 0.806 0.800 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.812 0.783 0.769 0.756 0.743 0.731 0.7180.706 0.694 0.683 0.672 0.661 0.650 0.640 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.658 0.641 0.624 0.609 0.593 0.579 0.564 0.551 0.537 0.524 0.512 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.572 0.552 0.534 0.482 0.467 0.451 0.437 0.423 0.410 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0.402 0.386 0.370 0.355 0.341 0.328 0.790 0.746 0.705 0.666 0.630 0.596 0.564 0.535 0.480 0.456 0.432 0.410 0.390 0.370 0.352 0.335 0.319 0.303 0.2890.275 0.262 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.376 0.354 0.333 0.314 0.296 0.279 0.263 0.249 0.235 0.222 0.210 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.376 0.351 0.327 0.305 0.285 0.266 0.249 0.233 0.218 0.204 0.191 0.179 0.168 0.703 0.6450.592 0.544 0.500 0.460 0.424 0.391 0.361 0.333 0.308 0.284 0.263 0.243 0.225 0.209 0.194 0.180 0.167 0.155 0.144 0.134 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.295 0.270 0.247 0.227 0.208 0.191 0.176 0.162 0.149 0.137 0.126 0.116 0.107 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0.215 0.195 0.178 0.162 0.148 0.135 0.123 0.112 0.103 0.094 0.086 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0.286 0.257 0.231 0.208 0.187 0.168 0.152 0.137 0.124 0.112 0.102 0.092 0.083 0.076 0.069 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.258 0.229 0.204 0.182 0.163 0.145 0.130 0.116 0.104 0.093 0.084 0.075 0.068 0.061 0.055 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.232 0.181 0.160 0.141 0.125 0.111 0.099 0.088 0.078 0.069 0.062 0.055 0.049 0.044 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.209 0.183 0.160 0.140 0.123 0.108 0.095 0.084 0.074 | 0.065 0.057 0.051 0.045 0.040 0.035 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.188 0.163 0.141 0.123 0.107 0.093 0.081 0.071 0.062 0.054 0.047 0.042 0.036 0.032 0.028 0.513 0.436 0.371 0.317 0.270 0.231 0.198 0.170 0.146 0.125 0.108 0.093 0.080 0.069 0.060 0.052 0.045 0.039 0.034 0.030 0.026 0.023 0.494 0.416 0.350 0.296 0.250 0.212 0.180 0.153 0.130 0.111 0.095 0.081 0.069 0.059 0.051 0.044 0.038 0.032 0.028 0.024 0.021 0.018 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.138 0.116 0.098 0.083 0.070 0.060 0.051 0.043 0.037 0.031 0.027 0.023 0.020 0.017 0.014 0.456 0.377 | 0.312 0.258 0.215 0.178 0.149 0.124 0.104 0.087 0.073 0.061 0.051 0.043 0.037 0.031 0.026 0.022 0.019 0.016 | 0.014 0.012 0.439 0.359 0.294 0.2420.199 0.164 0.135 0.112 0.093 0.077 0.064 0.053 0.044 0.037 0.031 0.026 0.022 0.018 0.015 0.013 0.011 0.009 0.422 0.342 0.278 0.226 0.184 0.150 0.123 0.101 0.083 0.068 0.056 0.046 0.038 0.032 0.026 0.022 0.018 0.015 | 0.013 0.011 0.009 0.007 0.406 0.326 0.262 0.211 0.170 0.138 0.112 0.091 0.074 0.060 0.049 0.040 0.033 0.027 0.022 0.018 0.015 0.012 0.010 0.009 0.007 0.006 0.390 0.310 0.247 0.197 0.158 0.126 0.1020.082 0.066 0.053 0.043 0.035 0.028 0.023 0.019 0.015 | 0.013 | 0.010 | 0.008 0.007 0.006 0.005 0.375 0.295 0.233 0.184 0.146 0.116 0.092 0.074 0.059 0.047 0.038 0.030 0.024 0.020 | 0.016 0.013 0.010 0.00 0.007 0.006 0.005 0.004 0.361 0.281 0.220 0.172 0.135 0.106 0.084 0.066 0.053 0.042 0.033 0.026 0.021 0.017 | 0.014 0.011 0.009 0.007 0.006 0.005 0.004 0.003 0.347 0.268 0.207 0.161 0.125 0.098 0.076 0.060 0.047 0.037 0.029 0.023 0.018 0.014 0.011 0.009 0.007 0.006 0.005 0.004 0.003 0.002 0.333 0.255 0.1960.150 0.116 0.090 0.069 0.054 0.042 0.033 0.026 0.020 | 0.0160.0120.010 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.321 0.243 0.185 0.141 0.107 0.082 0.063 0.048 0.037 0.029 0.022 0.017 0.014 0.0110.008 0.006 0.005 0.004 0.003 0.002 0.002 0.002 0.308 0.231 0.174 0.131 0.099 0.075 0.057 0.044 0.033 0.026 0.020 0.015 | 0.012 0.009 0.007 0.005 0.004 0.003 0.003 0.002 0.002 0.001 0.208 0.142 0.097 0.067 0.046 0.032 0.022 0.015 0.0110.008 0.005 0.004 0.003 0.002 0.001 0.001 0.001 0.000 0.000 0.000 0.000 0.000 EXHIBIT 12B-2 Present Value of an Annuity of $1 in Arrears: 1/r(1-(1/(1+r)^n)) Periods 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 40 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 0.962 22% 24% 0.952 23% 25% 0.943 0.935 0.926 0.917 | 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 | 0.826 0.820 0.813 0.806 1.886 1.859 0.800 1.833 1.808 1.783 1.759 1.736 | 1.713 1.690 1.668 1.647 1.626 1.605 1.585 | 1.566 1.5471.528 1.509 2.775 1.492 | 1.474 2.723 1.457 | 1.440 2.673 2.624 2.577 2.531 2.487 2.444 | 2.402 2.361 2.322 2.283 2.246 2.210 | 2.174 | 2.140 2.106 2.074 3.630 2.042 1.981 3.546 2.011 3.465 3.387 1.952 3.312 3.240 3.170 3.102 3.037 2.974 | 2.914 2.855 2.798 | 2.743 2.690 2.639 4.452 2.589 2.540 2.494 2.448 4.329 2.404 2.362 4.212 4.100 3.993 3.890 3.791 3.696 3.605 3.517 3.433 3.352 3.274 3.199 3.127 | 3.058 2.991 2.926 2.864 5.2425.076 2.803 2.745 2.689 4.917 4.767 4.623 4.486 4.355 4.231 4.111 3.9983.889 3.784 3.685 3.589 3.498 3.410 6.002 3.326 3.245 3.167 5.786 5.582 3.092 3.020 | 2.951 5.389 5.206 5.033 4.868 4.712 4.564 4.423 4.288 4.160 4.039 3.922 3.812 3.706 3.605 3.508 3.416 3.327 6.733 6.463 3.242 6.210 5.971 5.747 3.161 5.535 5.335 5.146 | 4.968 4.799 4.639 | 4.487 4.344 4.207 4.078 3.954 3.837 7.435 3.726 3.619 7.108 6.802 6.515 6.247 3.518 3.421 3.329 5.9955.759 5.537 5.328 5.132 4.9464.772 4.607 4.451 4.303 4.163 4.031 3.905 3.786 3.673 3.566 3.463 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.889 5.650 5.426 5.216 5.019 4.833 4.659 4.494 4.339 4.192 4.054 8.760 8.306 3.923 3.799 3.682 3.571 7.887 7.499 7.139 6.805 6.495 6.207 5.938 5.687 5.4535.234 5.029 4.836 4.656 4.486 4.327 4.177 4.035 9.385 3.902 8.863 8.384 7.943 3.776 3.656 7.536 7.161 | 6.814 6.492 6.194 5.918 5.660 5.421 5.197 4.988 4.793 4.611 4.439 9.986 4.278 9.394 4.127 3.985 8.853 8.358 3.851 3.725 7.904 7.487 7.103 6.750 6.424 6.122 5.8425.583 5.342 5.118 4.910 4.715 4.533 4.362 4.203 10.563 9.899 4.053 3.912 8.745 3.780 9.295 8.244 7.786 7.3676.982 6.628 6.302 6.0025.724 5.468 5.229 5.008 4.802 4.611 4.432 11.118 10.380 | 9.712 4.265 4.108 3.962 9.108 8.559 3.824 8.061 7.606 7.191 6.811 6.462 6.142 5.847 5.575 5.324 5.092 4.876 4.675 4.489 11.652 10.838 10.106 4.315 4.153 9.447 4.001 3.859 8.851 8.313 7.824 7.379 6.9746.604 6.265 5.954 5.668 5.405 5.162 4.938 4.730 4.536 4.357 12.166 | 11.274 10.477 | 9.763 9.122 4.189 4.033 3.88 8.544 8.022 7.549 7.120 6.7296.373 6.047 5.749 5.475 5.222 4.990 4.775 4.576 4.391 4.219 12.659 11.690 10.828 10.059 9.372 4.059 3.910 8.7568.201 7.702 7.250 6.840 6.467 6.128 5.818 5.534 5.273 5.033 4.812 4.608 13.134 12.085 11.158 10.336 9.604 4.419 4.243 4.080 3.928 8.950 8.365 7.839 7.366 | 6.938 6.550 6.198 5.8775.584 5.316 5.070 4.843 4.635 13.590 12.462 11.470 10.594 | 9.818 4.442 | 4.263 4.097 3.942 9.129 8.514 7.963 7.469 7.025 6.623 6.259 5.929 5.628 5.3535.101 4.870 4.657 4.460 4.279 4.110 14.029 12.821 | 11.764 10.836 10.017 | 9.292 3.954 8.649 8.075 7.562 7.1026.687 6.312 5.973 5.665 5.384 5.127 4.891 4.675 4.476 14.451 | 13.163 12.042 | 11.061 10.201 4.292 4.121 3.963 9.442 8.7728.176 7.645 7.170 6.743 6.359 6.011 | 5.696 5.410 5.149 4.909 4.690 14.857 13.489 12.303 11.272 10.371 4.488 4.302 4.130 3.970 9.580 8.883 | 8.266 7.718 7.230 6.792 6.399 6.044 5.723 5.432 5.167 4.925 4.703 15.247 13.799 12.550 11.469 10.529 9.707 8.985 8.348 4.499 4.311 4.137 3.976 7.784 7.283 6.835 6.434 6.073 5.746 5.451 5.182 4.937 4.713 4.507 4.318 15.622 14.094 12.783 11.654 10.675 9.8239.077 8.422 4.143 3.981 7.843 7.330 6.873 6.464 6.097 5.7665.467 5.195 4.9484.721 15.983 14.375 | 13.003 11.826 10.810 | 9.929 | 9.161 4.514 4.323 4.147 3.985 8.488 7.896 7.372 6.906 6.491 6.118 5.783 5.480 5.206 4.956 4.728 4.520 4.328 16.330 14.643 13.211 11.987 10.935 10.027 | 9.237 4.151 3.988 8.548 7.943 7.409 6.935 6.514 6.136 5.798 5.492 5.215 4.964 4.734 4.524 4.332 4.154 16.663 14.898 13.406 12.13711.051 10.116 | 9.307 8.602 3.990 7.984 7.441 | 6.961 6.534 6.152 5.810 5.5025.223 4.970 4.739 4.528 4.335 4.157 16.984 15.141 | 13.591 | 12.278 11.158 10.1989.370 8.650 3.992 8.022 7.470 6.983 6.551 6.166 5.820 5.510 5.229 4.975 4.743 17.292 15.372 13.765 | 12.409 11.258 10.274 | 9.4278.694 4.531 4.337 4.159 3.994 8.055 7.496 | 7.003 6.566 6.177 5.829 5.517 5.235 4.979 4.746 19.793 17.159 15.046 13.332 11.925 10.757 | 9.779 4.534 4.339 4.160 3.995 8.951 8.244 7.634 7.105 6.642 6.233 5.871 5.548 5.258 4.997 4.760 4.544 4.347 4.166 3.999