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Perit Industries has $135,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Cost of equipment
Perit Industries has $135,000 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 $135,000 $0 $22,000 $8,400 6 years Project B $0 $135,000 $66,000 $0 6 years The working capital needed for project B will be released at the end of six years for investment elsewhere. Pert Industries' discount rate is 17% Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the appropriate discount factor(s) using tables Required a. Calcu late net present value for each project. Project A Project E Net present value
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