Exercise 14 7 Algo Net Present Value Analysis Of Two Alternatives Lo14 2 Perit Industries Has 130 000 To Invest Th 1 (173.07 KiB) Viewed 36 times
Exercise 14 7 Algo Net Present Value Analysis Of Two Alternatives Lo14 2 Perit Industries Has 130 000 To Invest Th 2 (203.71 KiB) Viewed 36 times
Exercise 14-7 (Algo) Net Present Value Analysis of Two Alternatives (LO14-2] Perit Industries has $130,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project Project A $ 130,000 $ 0 $ 22,000 $ 8,300 6 years Project B $ 0 $ 130,000 $ 33,000 $ 0 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 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 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?
Required: 1. Compute the net present value of Project A. (Enter negative values with a minus sign. Round your final ans whole dollar amount.) 2. Compute the net present value of Project B. (Enter negative values with a minus sign. Round your final ans 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 3. Which investment alternative (if either) would you recommend that the company accept?
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