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Category > Accounting Posted 17 May 2017 My Price 8.00

Perit Industries has $100,000 to invest

Perit Industries has $100,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are:
  Project A Project B
Cost of equipment required  $100,000     $0   
Working capital investment required $0    $100,000   
Annual cash inflows $21,000     $     16,000
Salvage value of equipment in six years $8,000    $0   
Life of the project 6 years    6 years  
The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries' discount rate is 14%. (Ignore income taxes.)
Required
(a) Calculate net present value for each project. (Negative amount should be indicated by a minus sign. Round your answer to the nearest dollar amount. Omit the "$" sign in your response.)
(b)Which investment alternative (if either) would you recommend that the company accept?    

Answers

Alpha Geek
(8)
Status NEW Posted 17 May 2017 12:05 PM My Price 8.00

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Attachments

file 1495024622-197447_1_636305432456602840_Perit-Industries.xlsx preview (150 words )
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