Business, 10.05.2021 15:50 katiepotter

Perit Industries has $135,000 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 $135,000 $0
Working capital investment required $0 $135,000
Annual cash inflows $22,000 $66,000
Salvage value of equipment in six years $8,400 $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 17%.

Required:
a. Compute the net present value of Project A.
b. Compute the net present value of Project B.
c. Which investment alternative (if either) would you recommend that the company accept?

Answers: 1

Show answers

Other questions on the subject: Business

Business, 22.06.2019 16:30, bedsaul12345

Which of the following has the largest impact on opportunity cost

Answers: 2

continue

Business, 22.06.2019 19:50, hallkanay7398

Ichelle is attending college and has a part-time job. once she finishes college, michelle would like to relocate to a metropolitan area. she wants to build her savings so that she will have a "nest egg" to start her off. michelle works out her budget and decides she can afford to set aside $9090 per month for savings. her bank will pay her 4 %4% per year, compounded monthly, on her savings account. what will be michelle's balance in five years?

Answers: 3

continue

Business, 22.06.2019 19:50, oomale

Joe pays ann to mow his lawn and ann mows vanna's lawn by mistake. vanna peers out her window and sees ann mowing, yet says nothing to ann about her mistake since vanna needs to have her lawn mowed. when ann approaches vanna for payment, vanna refuses, arguing that she never asked ann to mow her lawn. under these circumstances, ann can recover payment from vanna under:

Answers: 1

continue

Business, 23.06.2019 02:30, yaxcalandreya

Tara and her parents want to save at least $40,000 for college in 8 years. which statement describes the most effective savings plan for tara and her parents to meet their goal? tara and her parents should make deposits of $300 every month into a college savings account. tara and her parents should make deposits of $450 every month into a college savings account. tara and her parents should make deposits of $3,000 every year into a college savings account. tara and her parents should make deposits of $4,000 every year into a college savings account

Answers: 1

continue

You know the right answer?

Perit Industries has $135,000 to invest. The company is trying to decide between two alternative use...