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Perit Industries has $190,000 to invest in one of the following two projects. Cost of equipment required Working capital investment required Annual cash inflows
Perit Industries has $190,000 to invest in one of the following two projects. Cost of equipment required Working capital investment required Annual cash inflows Project A $ 190,000 se Project B $ e $ 28,000 $ 8,900 $ 190,000 $ 48,000 6 years 6 years Salvage value of equipment in six years Life of the project 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 148-1 and Exhibit 14B-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?
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