Sharp Company has $16,000 to invest. The company is trying to decide between two alternative uses of the funds as follows:

	Invest in Project A		Invest in Project B
Investment required	$	16,000	$	16,000
Annual cash inflows	$	4,500		$ 0
Single cash inflow at the end of 11 years			$	44,000
Life of the project	11 years		11 years

Sharp Company uses a 15% discount rate. (Ignore income taxes.)

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.

Required:

a.	Determine the net present value. (Negative amounts should be indicated by a minus sign. Round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

	Net Present Value
Project A	$
Project B	$

b.

Which investment would you recommend that the company accept?

	Project A
	Project B --------------------------------------------------- Exhibit 13B-1 http://lectures.mhhe.com/connect/0078111005/Exhibit/Exhibit%2013B-1.jpg Exhibit 13B-2 http://lectures.mhhe.com/connect/0078111005/Exhibit/Exhibit%2013B-2.jpg