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The management of Kunkel Company is considering the purchase of a $34,000 machine that would reduce operating costs by $9,000 per year. At the end
The management of Kunkel Company is considering the purchase of a $34,000 machine that would reduce operating costs by $9,000 per year. At the end of the machine's five-year useful life, it will have zero salvage value. The company's required rate of return is 12%. Click here to view Exhibit 138-1 and Exhibit 138-2, to determine the appropriate discount factor(s) using table. Required 1. Determine the net present value of the investment in the machine 2. What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine? Complete this question by entering your answers in the tabs below. Required 1Required2 Determine the net present value of the investment in the machine. (Negative amounts should be indicated by a minus sign. Round your final answer to the nearest whole dollar amount. Use the appropriate table to determine the discount factor(s).) Net present value Required1 Required 2 Complete this question by entering your answers in the tabs below Required 1Required 2 What is the difference between the total, undiscounted cash inflows and cash outflows over the entire life of the machine? (Any cash outflows should be indicated b a minus.sign:. Total difference in undiscounted cash inflows and outflows Required 1 Required 2 Perit Industries has $200,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are Project A Project B 200,000 Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project 0 $200,000 $ 29,000 51,000 $ 9,000 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 14%. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. Requirec 1. Compute the net present value of Project A. (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. (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? 1. Net present value project A 2. Net present value project B Which investment alternative (if either) would you recommend that the company accept
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