Perit Industries has $150,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A $ 150,000 $0 Project B $ 0 $ 150,000 $ 24,000 $ 37,000 $ 8,500 6 years Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project $ 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%. Click here to view Exhibit 7B-1 and Exhibit 7B-2. to determine the appropriate discount factor(s) using tables Required: 1. Compute the net present value of Project A. Note: 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. Note: 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 7B-1 Present Value of $1;- 1 (1+r) Periods 4% 5% 6% 7% 13% 14% 1 0.962 0952 0943 2 0925 0907 0.890 3 0.889 0.864 0840 4 0855 0823 0.792 5 0822 0.784 0.747 0.621 6 0.790 0.746 0.705 0 666 0.630 0596 0 564 7 0.760 0711 0.665 0.623 0.583 0547 0.513 S 0.731 0.677 0.627 0.582 0.540 0.502 9. 0.703 0.645 0592 0.544 0.500 0460 10 0676 0.614 0558 0508 0.463 0422 11 0.650 0.585 0527 0475 0.429 0388 12 0625 0557 0.497 0.444 0397 0356 13 0.601 0530 0.469 14 0.577 0505 0442 15 16 17 18 0494 0.416 0.350 0296 0250 19 0.083 20 21 22 23 24 26 27 25 0.422 0.342 0278 0.226 0184 0150 0123 0101 0083 0068 0056 0046 0038 0032 0026 0022 0018 0015 0013 0011 0009 0007 0015 0013 0011 0009 0406 0.326 0262 0211 0170 0.138 0112 0.091 0074 0.060 0049 0040 0033 0027 0022 0015 0015 0012 0.010 0.009 0007 0006 0390 0310 0247 0197 0158 0126 0102 0082 0066 0.053 0043 0.035 0028 0023 0019 0015 0015 0010 0008 25 0375 0.295 0233 0184 0146 0116 0092 0074 0059 0047 0038 0.007 0.006 0.005 0030 0024 0.020 0.016 0013 0010 0009 0007 00060005 0361 0281 0220 0172 0135 010600840066 0053 0042 0.033 0026 0021 0017 0014 001100090007 0.006 0.005 0.0040003 0347 0268 0207 0161 0125 0095 0.076 0060 0047 0017 0029 0075 0015 0014 0011 0.00900070006 0.0050004 000 0002 0333 0255 0196 0150 0116 0090 0069 0.054 0042 0.033 0026 0020 0016 00120010 0008 3% 9% 10% 11% 12% 15% 16% 17% 18% 19% 0.935 0.926 0917 0909 0.901 0.893 0.885 0.877 0870 0.862 0.855 0.847 0840 0833 0.826 0.820 0813 0806 0.800 20% 21% 22% 23% 24% 25% 0.873 0857 0.842 0.826 0812 0.797 0.783 0.769 0.756 0.743 0.731 0.718 0.706 0.694 0683 0672 0661 0650 0640 0816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.763 0.735 0708 0.683 0659 0.636 0.658 0.641 0.624 0609 0593 0579 0.564 0.551 0537 0.524 0.512 0.613 0.592 0572 0.552 0.534 0516 0.499 0.713 0681 0650 0.593 0.567 0.543 0482 0467 0.451 0437 0423 0410 0.519 0497 0.476 0.456 0437 0.419 0.402 0.386 0370 0.355 0.341 0535 0.507 0 480 0.456 0.432 0410 0 390 0370 0.352 0.328 0.482 0452 0.425 0.400 0376 0354 0.333 0.314 0.296 0279 0.263 0.249 0235 0.222 0210 0.335 0.319 0.303 0.289 0.275 0.262 0.467 0.434 0.404 0.376 0351 0.327 0.305 0.285 0266 0249 0.233 0.218 0.204 0.191 0179 0.168 0424 0391 0361 0333 0308 0.284 0263 0.243 0.225 0.209 0 194 0 180 0167 0155 0144 0134 0.386 0.352 0322 0.295 0270 0247 0.227 0.208 0.191 0176 0.162 0.149 0.137 0126 0.116 0.107 0.350 0317 0287 0.261 0237 0215 0195 0178 0162 0148 0.135 0.123 0112 0.103 0.094 0086 0319 0286 0257 0.231 0.208 0187 0168 0152 0.137 0.124 0112 0102 0092 0083 0076 0069 0415 0368 0326 0.290 0.258 0229 0.204 0.182 0.163 0.145 0.130 0116 0104 0093 0.084 0.075 0.068 0061 0.055 0.388 0340 0.299 0.263 0232 0.205 0181 0.160 0.141 0125 0.111 0099 0088 0.078 0069 0.062 0.055 0.049 0.044 0555 0.481 0.417 0 362 0315 0275 0239 0.209 0183 0160 0.140 0123 0108 0.095 0534 0.458 0394 0339 0292 0252 0218 0.188 0.163 0141 0084 0074 0.065 0.057 0051 0.045 0040 0.035 0513 0436 0371 0317 0270 0231 0123 0107 0093 0081 0071 0.062 0.054 0047 0.042 0016 0032 0025 0198 0170 0.146 0125 0108 0.093 0.080 0069 0.060 0052 0045 0039 0034 0030 0026 0212 0180 0.153 0.130 0111 0095 0.081 0069 0.059 0.051 0475 0396 0331 0277 0232 0194 0.164 0138 0116 0098 0.044 0038 0032 0028 0024 0021 0.018 0456 0377 0312 0258 0215 0178 0149 0 124 0104 0.087 0.073 0061 0051 0043 0037 0031 0026 0022 0019 0016 0014 0.012 0070 0060 0051 0043 0037 0.0310027 0023 0020 0.017 0.014 0419 0359 0294 0242 0199 0164 0135 0112 0093 0.077 0064 0053 0044 0037 0051 0026 0022 0.018 0.023 0004 0006 0005 0004 0.003 0.002 0.002 29 0321 0243 0185 0141 0107 0.082 0063 0048 0.037 0029 0022 0017 0014 0011 000 0006 0005 0004 000) 0.002 0.002 0.002 30 0.308 0231 0174 0131 0099 0075 0.057 0044 0013 0026 0020 0015 0012 00090007 0.0050004 0003 000 40 0002 0002 0001 0208 0142 0.097 0.067 0.046 0032 0022 0015 0011 000 0005 00040003 0002 000100010001 0000 0000 0000 0000 0000 EXHIBIT 7B-2 Present Value of an Annuity of $1 in Arrears, (1+r) 3.102 3 696 4.231 3.905 3786 3.67) 3.566 3463 4 054 3923 3.799 3.682 3571 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 0962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0833 0.826 0.820 0813 0.306 0.800 1886 1859 1833 1.808 1783 1.759 1.736 1.713 1690 1668 1.647 1.626 1.605 1.585 1.566 1547 1528 1509 1492 1474 1457 1.440 2.775 2.723 2.673 2624 2.577 2.531 2.487 2444 2 402 2.361 2.322 2.283 2246 2.210 2.174 2.140 2.106 2.074 2042 2011 1981 1952 3.630 3.546 3.465 3.387 3.312 3240 3.170 3.037 2.974 2.914 2 855 2.798 2.743 2 690 2639 2.589 2.540 2494 2448 2.404 2.362 4.452 4.329 4212 4.100 3.993 3890 3.791 3 605 3517 3:433 3.352 3.274 3.199 3.127 3.058 2.991 2926 2 864 2.803 2.745 2 689 4.486 4355 4.111 3.998 3.889 3.784 3685 3.589 3.495 3.410 3.326 3245 3.167 3.092 3.020 2.951 6.002 5.786 5582 5.389 5.206 5033 4968 4.712 4.564 4.423 4.288 4.160 4.039 3.922 3812 3.706 3.605 3.508 3.416 3.327 3.242 3.161 6.733 6463 6210 5971 5.747 5.535 5.335 5.146 4.968 4.799 4619 4487 4 344 4.207 4.078 3954 3.837 3.726 3619 3.518 3421 3329 7.435 7.108 6802 6515 6247 5.995 5.759 5.537 5.328 5.132 4946 4.772 4.607 4.451 4303 4163 4.031 6418 6145 5.889 5.650 5.426 5216 5.019 4.833 4.659 4.494 4.359 4 192 6 805 6495 6 207 5938 5.687 5.453 5.234 5.029 4836 4.656 4.486 4327 4177 4.035 3.902 3.776 3.656 9.385 $863 384 7.161 6.814 6 492 6.194 5918 5.660 5421 5197 4.988 4793 4611 4.439 4278 4127 3.985 3851 3725 9.956 9.194853 3587904 7487 7103 6750 6424 6122 5842 5.583 5.342 5.118 4910 4.715 4533 4.362 4 203 4053 3912 3.780 945 1244 7.786 7.367 6982 6628 6.302 6 002 5 724 5.468 5229 5.008 4.802 4611 4432 4.265 4 108 3962 3824 8559 8061 7.606 7191 6811 6.462 6142 5.847 5.575 5.324 5.092 4876 4.675 4489 4.3154 1534.001 3859 8851 8313 7.824 7379 6974 6.604 6.265 5.934 5.668 5.405 5.162 4938 47304516 4357 4189 40333 3.887 9.1228544 022 7549 7120 6729 6373 6047 5749 5.475 5222 4990 4.775 4.576 4.3914219 4059 3910 8201 7702 7.250 6.840 6 467 6128 5.818 5534 5273 5033 4812 4608 4419 4243 4080 3.928 8.950 8 365 7.819 7.366 6.938 6.550 6.198 5.877 5584 5316 5070 4843 4635 4442 426) 4097 3.942 9129 8514 7.963 7.469 7025 6623 6259 5929 5678 53535101 4870 4657 4 460 4279 4110 3.954 8649 8075 7.562 7.102 6687 6312 5973 5665 5.384 5.127 4891 4675 4476 4292 4121 3.963 7728.176 7645 7170 6743 6359 6.011 5696 5.410 5.149 4909 4 690 4 455 4302 4.130 3.970 9580 88838266 7718 7230 6792 6399 6044 5723 5.432 5.167 4.925 4.709 4499 4.311 4137 3.976 9.707 8985 8.348 7.784 7253 6.835 6434 6073 5 746 5.451 5112 4.957 4.713 4.507 4318 4143 3981 10.675 9823 9.077 422 7.843 7.350 687) 6464 6097 5.766 5.467 5.195 4948 4.721 4.514 4323 4147 3.985 11.826 10 810 9929 9.161 8 488 7.896 7372 6906 6.491 6118 5.783 5.480 5206 4956 4 728 4.520 4328 4151 3988 11 987 10.935 10 027 9.237 8.548 7943 7.409 6935 6.514 6136 5.798 5.492 5215 4.964 4.734 4524 4332 4.154 3.990 12 137 11.051 10 116 9.307 8 602 7.984 7.441 6961 6.534 6152 5810 5502 5223 4.970 4.739 4528 4335 4.157 3.992 12.278 11.158 10.198 9370 8.650 8022 7.470 6983 6551 6166 5.820 5.510 5229 4.975 4743 4531 4.337 4159 3994 12.409 11 258 10 274 9.427 694 055 7.496 7.003 6566 6177 5.829 5.517 5.235 4979 4.746 4534 4339 4.160 3995 13 332 11 925 10.757 9779 8.951 8.244 7634 7105 6642 6233 5871 5548 5258 4997 4760 4.544 4347 4 166 3999 Periods 4% 5% 6% 1 2 3 4 5 6 5.242 5.076 4.917 4.767 4.623 7 S 9 10 8.111 7.722 7.360 7.024 11 8 760 8306 7887 7.499 12 6.710 7139 7.943 7.536 13 14 10 563 9899 9.295 15 11.118 10 150 9.712 9.108 16 11 652 10 8338 10 106 9447 17 12 166 11 274 10 477 9.763 15 12 659 11 690 10 828 10 059 9372 756 19 13.134 12 085 11 158 10 336 20 13 590 12 462 11 470 10 594 9604 9818 21 14.029 12 821 11 764 10 836 10.017 9.292 22 14.451 13 163 12 042 11 061 10 201 9.442 23 14 157 13.489 12.303 11 272 10 371 24 15.247 13 799 12.550 11 469 10 529 25 15.622 14.094 12 783 11.654 26 15 983 14375 13 003 27 28 16.330 14 645 16 663 14 898 13.211 13 406 29 30 40 16.954 15.141 17 292 15 372 19 793 17 159 13 591 13 765 15 046