Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Perit Industries has $175,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A Project
Perit Industries has $175,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A Project B Cost of equipnent required $175,000 $ e Working capital investment required $ 0 $175,000 Annual cash inflows $ 27,000 $ 44,000 Salvage value of equipment in six years $ 8,800 Life of the project 6 years $ e 6 years Prima The working capital needed for project B will be released at the end of six years for investment elsewhere. Porit Industries' discount rate is 15% Click here to view Exhiblt 148.1 and Exhibit 148-2 to determine the appropriate discount factor(s) using tables. Required: 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 of other would you recommend that the company accept? Net present value project Check my work Salvage value of equipment in six years Life of the project $ $ 8,888 6 years 6 years The working capital needed for project will be released at the end of six years for investment elsewhere. Perit Industries discount rate is 15% Click here to view Exhibit 148-1 and Exhibit 148-2. 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 of either would you recommend that the company accept? 1. Net present value project A 2 Not present value project B Which investment allemative (Weither) would you 3 recommend that the company accept
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started