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show calculation please 2. You are considering investing in one of the following two projects: Project A has initial cash outlay of $130,000 to purchase
show calculation please
2. You are considering investing in one of the following two projects: Project A has initial cash outlay of $130,000 to purchase the equipment. It is expected that the equipment will have a salvage value of $23,000 at the end of the project life. In addition, in 2022 you plan to spend $28,000 to purchase inventory (increase in current assets) and expect accounts payable to increase by $35,000 (increase in current liabilities). Inventory and Accounts Payable will remain constant over the life of the project (Years 2023-2026) but in the terminal year (2027) all inventory will be sold (decrease in current assets) and all accounts payable paid off (decrease in current liabilities). The company's tax rate is 21%. Project B has initial cash outlay of $32,000 to purchase the equipment. It is expected that the equipment will have a salvage value of $8,000 at the end of the project life. In addition, in 2022 you plan to spend $9,000 to purchase inventory (increase in current assets) and expect accounts payable to increase by $12,000 (increase in current liabilities). Inventory and Accounts Payable will remain constant over the life of the project (Years 2023-2026) but in the terminal year (2027) all inventory will be sold (decrease in current assets) and all accounts payable paid off (decrease in current liabilities). The company's tax rate is 21%. a. Calculate the Cash Flows for each project. You can round answers to the nearest dollar. b. Determine the Payback Period for each project. You can round your answer to two decimal places. For the next three questions use the following discount rotes: c. Determine the Discounted Payback Period for each project. d. Calculate the Net Present Value of each project. NPV of Project A: NPV of Project B: e. Calculate the Internal Rate of Return for each project. IRR of Project A: \% IRR of Project B: \% f. Calculate the Profitability Index for each project. PI of Project A: P1 of Project B: g. If the projects are mutuolly exclusive, which project would you select and why Step by Step Solution
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