Q$7$: erit Industries has $$110,000$ to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are:

Project A Project B

Cost of equipment required $ $110,000$ $ $0$

Working capital investment required $ $0$ $ $110,000$

Annual cash inflows $ $20,000$ $ $28,000$

Salvage value of equipment in six years $ $8,100$ $ $0$

Life of the project $6$ 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 $7$B$-1$ and Exhibit $7$B$-2,$ 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?