Perit Industries has $130,000 to invest. The company is trying to decide between two alternative uses...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/06/665abb1d07997_172665abb1c6223f.jpg)
Transcribed Image Text:
Perit Industries has $130,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project Project A $ 130,000 $ 0 Project B $ 0 $ 130,000 $ 21,000 $ 8,100 $ 65,000 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 17%. Click here to view Exhibit 14B-1 and Exhibit 14B-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? Perit Industries has $130,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project Project A $ 130,000 $ 0 Project B $ 0 $ 130,000 $ 21,000 $ 8,100 $ 65,000 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 17%. Click here to view Exhibit 14B-1 and Exhibit 14B-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?
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Assume the same facts as in Problem 2-55. In problem 2-55 On June 3 of the current year, Eric, Florence, and George form Wildcat Corporation and transfer the following items: Item Transferred Eric...
-
Specific Identification, FIFO, LIFO, and Weighted-Average Swing Company's beginning inventory and purchases during the fiscal year ended September 30, 20-2, were as shown. Units Unit Price Total Cost...
-
Q. Using regression analysis for forecasting x = 5% 7% 10% 12% 15% y = 100,000 80,000 40,000 20,000 10,000
-
Ivanhoe Candle Supply makes candles. The sales mix (as a percentage of total dollar sales) of its three product lines is birthday candles 30%, standard tapered candles 45%, and large scented candles...
-
The operations vice-president of the Regal Bank of Canada, Kristin Wu, has been interested in investigating the efficiency of the bank's operations. She has been particularly concerned about the...
-
Sonic Wave Corporation's plantwide predetermined overhead rate is $16.00 per direct labor-hour and its direct labor wage rate is $20.00 per hour. The following information pertains to Job B-300. What...
-
The following transactions were selected from among those completed by Bennett Retailers in November and December: November 20 November 25 November 28 November 29 December 6 December 20 Required:...
-
3. A solid 30 mm 25 mm 5 mm thick rectangular piece of copper has a 15 mm diameter circle inscribed onto it prior to being loaded. The circle is centered on the piece of copper. Knowing that the...
-
1. Refer to the PSPP Analysis of Job Loss (BLI, 2015). You performed a one-sample t-test to test whether mean job loss percentages differ from 10. Suppose that the researchers tested whether job loss...
-
Extract the annual report of a Fortune Global 500 company from a country different from your home country; use the site www.glgc.com/g600.html, or...
-
Plan a study term abroad. What would you want to learn and why? How would this change if you were a business?
-
Explain the difference between spot and forward exchange rates.
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App