Perit Industries has $210,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Project B Project A $210,000 SO $0 Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project $210,000 $52,000 $30,000 $9,100 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 15%. Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the appropriate discount factor(s) using tables Required: a. Calculate net present value for each project. Project A Project B Net present value von ecommend that the company sce b. Which investment alternative (if either) would you recommend that the company accept? Project A Project B EXHIBIT 11B-1 Present Value of $1: 1 Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 10% 20% 21% 22% 23% 24% 25% 0.9.52 0.952 0.943 0.935 0.926 0.917 0.909 0.001 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.812 0.797 0.783 0.769 0.756 0.743 0.731 0.718 0.706 0.694 0.683 0,672 0.061 0.650 0.640 0.833 0.826 0,820 0.813 0.806 0 800 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.658 0.641 0.624 0.609 0.593 0.579 0.564 0.551 0.537 0.524 0.512 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.572 0.552 0.534 0.516 0.499 0.482 0.467 0.451 0.437 0.423 0410 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.543 0.510 0.497 0.476 0.466 0.437 0.419 0.402 0.386 0.370 0.356 0.341 0.328 0.790 0.746 0.705 0.666 0.630 0.506 0.564 0.535 0.507 0.480 0.456 0.432 0.410 0.390 0.370 0.352 0.335 0.319 0.303 0.299 0.275 0.262 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.378 0.354 0.333 0.314 0296 0.279 0.263 0.249 0.235 0.222 0.210 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0.404 0.376 0.351 0.327 0.305 0.285 0.266 0240 0.233 0.218 0204 0.191 0.179 0.168 0.703 0.645 0.592 0.544 0.500 0.460 0.424 0.391 0.361 0.333 0.308 0.284 0263 0.243 0.225 0.209 0.194 0.180 0.167 0.155 0.144 0.134 10 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.295 0.270 0.247 0.227 0.208 0.191 0.176 0.162 0.149 0.137 0.126 0.116 0.107 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0.215 0.195 0.178 0.162 0.148 0.135 0.123 0.112 0.103 0.004 0.006 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0286 0.257 0231 0.208 0.187 0.168 0.152 0.137 0.124 0.112 0.102 0.092 0.083 0.078 0.069 13 0.601 0.530 0.469 0.415 0.368 0.326 0 290 0.258 0.229 0204 0.182 0.163 0.145 0.130 0.116 0.104 0.003 0.084 0.075 0.068 0.061 0.055 14 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.232 0.205 0.181 0.160 0.141 0.125 0.111 0.000 0.008 0.078 0.089 0.062 0.055 0.049 0.044 15 0 555 0.481 0.417 0.362 0.315 0.275 0.239 0.209 0.183 0.160 0.140 0.123 0.108 0,096 0.084 0.074 0.065 0.057 0.051 0.045 0.040 0.035 0.534 0.458 0.304 0.339 0.292 0.252 0.218 0.188 0.163 0.141 0.123 0.107 0.093 0.081 0.071 0.062 0.054 0.047 0.042 0.036 0.032 0.028 0.513 0.436 0 371 0.317 0.270 0.231 0.19 0.170 0.146 0.125 0.108 0.093 0.00 0.00 0.060 0,052 0.045 0,019 0.034 0.030 0.025 0.023 18 0.494 0.416 0.350 0.20 0.250 0.212 0.180 0.153 0.130 0.111 0,005 0.081 0.060 0,050 0.051 0.044 0.038 0.002 0.028 0.024 0.021 0.018 0475 0.396 0.331 0.277 0232 0.194 0.164 0.138 0.116 0.008 0.083 0.070 0.060 0,051 0.043 0.037 0.031 0,027 0,023 0.020 0.017 0014 20 0.456 0.377 0.312 0.258 0.215 0.178 0.140 0.124 0.104 0.007 0.073 0.061 0.051 0.043 0.037 0.031 0.026 0.022 0.019 0.016 0.014 0.012 0.430 0.35 0.204 0 242 0.199 0.164 0.135 0.112 0.003 0.077 0.064 0.053 0.044 0.037 0.031 0.026 0.002 0.018 0015 0.013 0.0110.000 0.422 0.342 0 278 0.226 0.184 0.150 0.123 0.101 0.003 0.068 0.056 0.046 0.038 0.032 0.026 0.022 0.018 0.015 0.013 0.011 0.000 0.007 23 0406 0.326 0262 0211 0.170 0.138 0.112 0.001 0.074 0.000 0.049 0.040 0.033 0.027 0.022 0.018 0,015 0,012 0.010 0.000 0.007 0.006 0.00 0.023 0.019 0,015 24 0.125 0.102 0.082 0.006 0.247 0.008 0.005 0.013 0010 0.00 0.053 0.043 0.035 0.028 0.30 0.310 0.107 0.158 25 0.375 0.295 0.233 0.184 0.146 0.116 0.092 0.074 0.050 0.047 0.038 0.030 0.024 0.020 0.016 0.013 0.010 0.000 0.007 0.008 0.005 0.004 0.003 0.361 0.281 0.220 0.172 0.135 0.106 0.084 0.066 0.053 0.042 0.033 0.025 0.021 0.017 0.014 0.011 0.009 0.007 0.006 0.005 0.00 27 0.347 0.250 0.207 0.161 0.125 0.008 0.078 0.000 0.047 0.037 0.029 0.023 0.018 0.014 0.011 0.000 0.007 0.008 0.005 0.004 0.003 0.002 0.116 0.020 0.000 0.016 0.012 0.010 0.069 0.054 0.042 0.033 0.026 0.256 0.16 0.150 28 0.008 0.32 0.006 0.005 0.004 0.003 0.002 0.002 0,005 0,004 0.003 0.002 0.002 0.002 0321 0243 0.18 0.141 0.107 0.02 0.063 0.048 0.037 0.029 0,022 0.017 0.014 0.011 0.008 0.005 30 0.308 0.231 0.174 0.131 0.000 0.075 0.057 0.044 0.033 0.026 0.020 0.015 0.012 0.000 0.007 0.005 0.004 0.003 0.003 0.002 0.002 0.001 40 0208 0.142 0.007 0.067 0.046 0.032 0.022 0,015 0,011 0.008 0.005 0.004 0.003 0.002 0.001 0.001 0.001 0.000 0.000 0.000 0.000 0.000 EXHIBIT 118-2 Present Value of an Annuity of $1 in Arrears: 41 - Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 0.962 0.952 0.043 0.935 0.926 0.017 0.909 0.001 0.893 0.885 0.877 0.870 0.662 0,855 0.347 0.840 0.833 0.828 0.820 0.813 0.806 0.800 1.886 1.8591,833 1.808 1.783 1.750 1.736 1.713 1.600 1.668 1.647 1.026 1.605 1.5.85 1 566 1.547 1.528 1.509 1402 1.474 1457 1.440 2.775 2.723 2673 2.624 2.577 2.531 2.487 2.444 2402 2.361 2.322 2.283 2.246 2.210 2.174 2.140 2.106 2.074 2042 2011 1.981 1.952 4 3.630 3.546 3.465 3.387 3.312 3240 3.170 3.102 3.037 2.974 2914 2.855 2.798 2.743 2.690 2639 2.580 2.540 2494 2448 2404 2.362 5 4.452 4.329 4.212 4.100 3.993 3.890 3.701 3.696 3.605 3.517 3.433 3.352 3.274 3.199 3.127 3.058 2.991 2926 2864 2.803 2.745 2.689 5.242 5.070 4.917 4.767 4.623 4.456 4.355 4 231 4.111 3.998 2.889 3.784 3.685 3.589 3.498 3.410 3.326 3245 3167 3.092 3.020 2.951 6.002 5.786 5.582 5.389 5.2065 033 4.868 4.712 4.564 4423 4288 4.160 4030 3.922 3.812 3.706 3.605 3.508 3.416 3.327 3242 3.161 6.733 6.463 6210 5.971 5.747 5.535 5.215 5.146 4.06 4.799 4.639 4 487 4.344 4 207 4,078 3.954 3.837 3.726 3619 3518 3421 3.329 7.435 7.108 6.802 6.515 6.247 5.995 5.750 5.537 5.328 5.132 496 4.772 4.607 4.451 4.303 4.163 4.031 3.905 3.786 3.673 3568 3.483 10 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.880 5.650 5.426 5.216 5.019 4833 4.650 4.494 4.339 4.192 4.054 3.923 3.799 3.682 3.571 11 8.760 8.306 7.887 7.499 7.139 6.805 6.495 6.207 5.938 5,687 5.453 5.234 5.020 4.836 4.656 4.486 4.327 4.177 4.035 3.002 3.778 3.656 12 9 .3858.863 8.384 7.943 7.5.36 7.161 6814 6.492 6.194 5.918 5.660 5.421 5.107 4988 4.793 4.611 4.439 4.278 4.127 3.985 3,851 3.725 13 9.986 9 394 8.853 8.358 7.904 7.487 7.103 6.750 6.424 8.122 5 142 5.5835 M2 5.118 4.910 4.715 4.533 4.362 4.203 4.053 3.912 3.780 14 10.563 0899 9.295 8.745 8.244 7.707 27 602 6.28 6.302 6.002 5.724 5.400 5.220 5.000 4.802 4.61 4.432 4 285 4.108 3.962 3.824 15 11.11 10.380 9.712 9.108 8.550 8.061 7.606 7.191 6.811 6.462 6.142 5.847 5 575 5.24 5.092 4.876 4.675 4.489 4.315 4.153 4,001 3.850 16 11.652 10.838 10.106 9.447 8.851 8.313 7.824 7.379 6.974 6,604 6.265 5.054 5.660 5.405 5.162 4.938 4.730 4.536 4357 4.189 4.033 3.887 17 12.166 11.274 10.477 9763 0.1228544 8022 75497.120 6.729 6.373 8,047 5.749 5.475 5222 4.000 4775 4.576 4.391 4219 4.050 3.910 18 12.650 11 600 10828 10.0500372 875 8201 7.702 7.250 6.8.40 6.467 6.128 5.818 5544 5.2735033 4.812 4 600 4.419 42434 ORO 3.92 19 13.134 12 OS 11.158 10.206 9.604 8050 815 7 39 7366 892 5.550 6.198 5877 5 514 5 316 5070 4843 4.635 4.442 4263 4097 3942 20 13 500 12 462 11 470 10 594 0.818 9.129 8514 703 7.450 7.025 5.623 6.250 5.929 5.628 5.353 5 101 4.870 4.657 4.460 4279 4.110 3.954 14.029 12 21 11.764 10 836 10 017 929 8.6498.075 7.562 7.102 5.687 6.312 5 973 5.665 524 5 127 4 891 4675 4.476 4292 4.121 3063 22 14.451 13.163 12.042 11.061 10 201 9.442 87728.176 7.545 7.70 6.743 6.359 8011 5.605 5.410 5.149 4.909 4.890 448 4302 4.130 3.970 14.857 13.489 12 303 11.272 10.371 9.500 .883 8265 7.718 7.230 6.792 6.300 6,044 5.723 5.432 5 187 4.025 4.700 4400 4311 4137 3.976 24 15 247 13.790 12.550 11.409 10.529 0.707 8.95 MB 7.784 7283 8.835 8.4146.073 5.746 5.451 5.182 4.937 4.713 4.507 4318 4.143 3.981 15.622 14.004 12.783 11.654 10.675 0.8239.077 8.422 7.843 7.330 6.873 6.464 6.097 5.705 5.467 5.105 4.048 4.721 4.514 4.323 4.147 3.985 26 15.083 14.375 13.003 11.826 10.810 0.920 0.161 8.488 7.896 7.372 6.906 6.401 6.118 5.783 5.480 $ 200 4.056 4.728 4520 4.328 4.151 3.988 27 16.300 14643 13.211 11.087 10,94 10.027 0.237 .548 743 7400 6.005 6.514 6.1 5.70 5.492 5215 4.14 4.744 424 43 4 154 3.000 28 16.663 14 OB 13.406 12.137 11.051 10.116 0 307 1.602 7984 7441 6.961 6,534 6.159 5.810 5.502 5.223 4,970 4.730 4.52 4.335 4.157 3.992 29 16 14 15 141 13.501 12.278 11.158 10.100 0370 850 3022 7470 6083 6.551 6.108 520 5.510 5220 4075 4.743 431 432 4,150 3.994 30 17.202 15.372 13.705 12.400 11.258 10.274 0,427 8.604 8055 740 7.003 6.500 6.177 5.20 5.517 5235 4.70 4.740 454 4.00 4.100 3.995 40 19.703 17.10 16.00 13.302 11.025 10.757 0.770 805 8.244 7.634 7.105 6.642 6.23 1 4 5258 4007 4.700 4.54 447 4166 3.900