Perit Industries has $155,000 to invest in one of the following two projects: Project A $ 155,000 $0 Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project $ 25,000 $ 8,600 6 years Project B $0 $ 155,000 $ 40,000 $0 6 years The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries' dis ate 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. Note: Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.

Perit Industries has $155,000 to invest in one of the following two projects: Project A $ 155,000 $0 Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project $ 25,000 $ 8,600 6 years Project B $0 $ 155,000 $ 40,000 $0 6 years The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries' dis ate 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. Note: Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount.

Name: Perit Industries has $155,000 to invest in one of the following two p
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Description: Perit Industries has $155,000 to invest in one of the following two projects:Cost of equipment requiredWorking capital investment requiredAnnual cash inflowsSalvage value of equipment in six yearsLife of the projectProject A$ 155,000$ 25,000$ 8,6006

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows

Section: Chapter Questions

Problem 19P

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