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Perit Industries has $125,000 to invest The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A $125,000 %24 $ 20,000 $ 8,000 6 years Project B %24 Cost of equipment required Working capital investment required Annual cash inflows $125,000 $ 64,000 2$ Salvage value of equipment in six years Life of the project 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 17%. 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 rhinus sign. Round your final answer to the nearest whole dollar amount.) 3. Which investment alternative (if either) would you recommend that the company accept?

Perit Industries has $125,000 to invest The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A $125,000 %24 $ 20,000 $ 8,000 6 years Project B %24 Cost of equipment required Working capital investment required Annual cash inflows $125,000 $ 64,000 2$ Salvage value of equipment in six years Life of the project 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 17%. 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 rhinus sign. Round your final answer to the nearest whole dollar amount.) 3. Which investment alternative (if either) would you recommend that the company accept?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries' discount rate is 17%. 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? 1. Net present value project A 2. Net present value project B Which investment alternative (if either) would you 3. recommend that the company accept? < Prev 7 of 8 Next > search 40
Transcribed Image Text:The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries' discount rate is 17%. 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? 1. Net present value project A 2. Net present value project B Which investment alternative (if either) would you 3. recommend that the company accept? < Prev 7 of 8 Next > search 40
Perit Industries has $125,000 to invest The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A Project B $125,000 %24 $ 20,000 $ 8,000 6 years Cost of equipment required Working capital investment required Annual cash inflows $125,000 $ 64,000 $ 6 years Salvage value of equipment in six years Life of the project The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries' discount rate is 17%. 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 rhinus sign. Round your final answer to the nearest whole dollar amount.) 3. Which investment alternative (if either) would you recommend that the company accept? < Prev 7 of 8 Next > 8:47 A 5/3/2 search 近
Transcribed Image Text:Perit Industries has $125,000 to invest The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A Project B $125,000 %24 $ 20,000 $ 8,000 6 years Cost of equipment required Working capital investment required Annual cash inflows $125,000 $ 64,000 $ 6 years Salvage value of equipment in six years Life of the project The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries' discount rate is 17%. 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 rhinus sign. Round your final answer to the nearest whole dollar amount.) 3. Which investment alternative (if either) would you recommend that the company accept? < Prev 7 of 8 Next > 8:47 A 5/3/2 search 近
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