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Ksenya-84 [330]
3 years ago
12

Perit Industries has $190,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternat

ives are: Project A Project B Cost of equipment required $ 190,000 $ 0 Working capital investment required $ 0 $ 190,000 Annual cash inflows $ 28,000 $ 48,000 Salvage value of equipment in six years $ 8,900 $ 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 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables.
Required:

1. Compute the net present value of Project A. (Enter negative value 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 value 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?

Business
1 answer:
Wewaii [24]3 years ago
3 0

Answer:

Please see attachment

Explanation:

Please see attachment

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