Business, 26.11.2019 23:31 50057543

Perit industries has $190,000 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 $ 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?

Answers: 3

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Perit industries has $190,000 to invest. the company is trying to decide between two alternative use...