6.6:05TB MC Qu. 14-55 (Algo) The management of Penfold Corporation...The management of Penfold Corporation is considering the purchase of a machine that would cost $310,000, would last for 6 years, and wouldhave no salvage value. The machine would reduce labor and other costs by $60,000 per year. The company requires a minimum pretax return of12% on all investment projects.© Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided.The net present value of the proposed project is closest to (Ignore income taxes.): (Round your intermediate calculations and final answer to thenearest whole dollar amount.)Multiple ChoiceО$(63,340)$(8.349)BO$(91,225)< Prev16 of 20Next>MacBook ProG Search or type URL

Step 1:Computation of NPV - Penfold CorporationParticularsPeriodAmountPV factor at 12%Present…

Answered: 6. 6:05 TB MC Qu. 14-55 (Algo) The…

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter10: Project Cash Flows And Risk

Section: Chapter Questions

Problem 11PROB

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ni.3 Nevland Corporation is considering the purchase of a machine that would cost $120, 000 and would last for 6 years. At the end of 6 years, the machine would have a salvage value of $18,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $43,000. The company requires a minimum pretax return of 19% on all investment projects. The net present value of the proposed project is closest A) $32,966 B) $26,376 C) $64,902 D) $30,040
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Perit Industries has $155,000 to invest in one of the following two projects: Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project Project A $ 155,000 $ 25,000 $ 8,600 6 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? X Answer is complete but not entirely correct. Project B $0 $ 155,000 $ 40,000 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. Note: 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. $(53,971) 70,527 X Project B $0…
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