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Perrot Industries has $375,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives follow. Cost of equipment
Perrot Industries has $375,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives follow. Cost of equipment required working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project Project B $339,800 $ 339,000 73,458 62,4ae 24,400 6 years 6 years The working capital needed for project will be released at the end of six years for investment elsewhere. Perrot Industries' discount rate is 10% Click here to view Exhibit 10-1 and Exhibit 10-2. to determine the appropriate discount factor(s) using tables. Required: 1-a. Calculate net present value for each project. (Negative amount should be Indicated with a minus sign. Round discount factor(s) to 3 decimal places. Round other intermediate calculations and final answers to the nearest whole number.) Net Present Value Project A Project B 1-6. Which investment alternative (if either) would you recommend that the company accept? Project A O Project B
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