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Perit Industries has $125,000 to Invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A Project
Perit Industries has $125,000 to Invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A Project B $ 71,000 Cost of equipment required Working capital investment required Annual cash inflows $125,000 $ 0 $ 0 $125,000 $ 23,000 Salvage value of equipment in six years Life of the project $ 8,900 6 years $ 0 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%. 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 Which investment alternative (if either) would you 3. recommend that the company accept
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