Question
Perit Industries has $135,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A Project
Perit Industries has $135,000 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 $135,000 $0 Working capital investment required $0 $135,000 Annual cash inflows $25,000 $63,000 Salvage value of equipment in six years $9,800 $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 17%.
1.Calculate net present value for each project. |
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