HomeworkLib
Question

Please Show Work!!!!

Perit Industries has $100,000 to invest. The company is trying to decide between two alternative uses for the funds. The alternatives are: Project A Project B Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project $100,000 $0 $21,000 $8,000 6 years $0 $100,000 $16,000 $0 6 years The working capital needed for Project B will be released at the end of six years for investment elsewhere Perit Industnes. discount rate is 14% Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the appropriate discount factor(s) using tables Required: a. Determine the net present values. (Any cash outflows should be indicated by a minus sign. Use the appropriate table to determine the discount factor(s). When you enter a factor, use a whole number followed by 3 decimal places, for example: 0.123 or 3.456.) 14% PV Factor Present Value of Cash Flows Year Cash Flow Project A Now 1.000 Purchase of equipment Annual cash inflows Salvage value Net present value 1-6 Project B 1.000 Working capital invested Annual cash inflows Working capital released Net present value Now

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Solution a:

Computation of NPV - Perit Industries
Particulars Year cash Flow PV factor at 14% Present Value
Project A:
Purchase of Equipment Now -$1,00,000 1 -$1,00,000
Annual cash inflows 1-6 $21,000 3.889 $81,669
Salvage value 6 $8,000 0.456 $3,648
Net Present Value -$14,683
Project B:
Working Capital Invested Now -$1,00,000 1 -$1,00,000
Annual cash inflows 1-6 $16,000 3.889 $62,224
Working Capital released 6 $1,00,000 0.456 $45,600
Net Present Value $7,824
1 0
Add a comment
Know the answer?
Add Answer to:
Please Show Work!!!! Perit Industries has $100,000 to invest. The company is trying to decide between...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Perit Industries has $220, 000 to invest. The company is trying to decide between two alternative...

    Perit Industries has $220, 000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: 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%. Required: Calculate net present value for each project. (Any cash outflows should be indicated by a minus sign. Use the appropriate table to determine the discount factor(s).)

  • Perit Industries has $100,000 to invest. The company is trying to decide between two alternative uses...

    Perit Industries has $100,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project Project A Project B $100,000 $ $ 0 $100,000 $ 21,000 $ 16,000 $ 8,000 $ 0 6 years 6 years The working capital needed for project B will be released at the end of six...

  • Perit Industries has $100,000 to invest. The company is trying to decide between two alternative uses...

    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 Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project $100,000 $ 0 $100,000 $ 16,000 0 $21,000 $ 8,000 $ б уеars 6 уеars The working capital needed for project B will be released at the end of six years for...

  • Perit Industries has $100,000 to invest. The company is trying to decide between two alternative uses...

    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...

  • Perit Industries has $155,000 to invest. The company is trying to decide between two alternative uses...

    Perit Industries has $155,000 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 $155,000 $0 Working capital investment required $0 $155,000 Annual cash inflows $20,000 $55,000 Salvage value of equipment in six years $9,400 $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...

  • Perit Industries has $140,000 to invest. The company is trying to decide between two alternative uses...

    Perit Industries has $140,000 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 $140,000     $0       Working capital investment required $0     $140,000       Annual cash inflows $23,000     $67,000       Salvage value of equipment in six years $8,500     $0       Life of the project 6 years     6 years         The working capital needed for project B will be...

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

    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 $135,000 Cost of equipment required Working capital investment required Annual cash inflowS Salvage value of equipment in six years Life of the project 0 $135,000 25,000 63,000 $ 9,800 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'...

  • Perit Industries has $190,000 to invest. The company is trying to decide between two alternative uses...

    Perit Industries has $190,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project Project A Project B $190,000 $ 0 $ 0 $190,000 $ 28,000 $ 48,000 $ 8,900 $ 0 6 years 6 years The working capital needed for project will be released at the end of six...

  • 1 Perit Industries has $125,000 to invest. The company is trying to decide between two alternative...

    1 Perit Industries has $125,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project Project A $125,000 $ 0 $ 23,000 $ 8,900 6 years Project B $ $125,000 $ 71,000 $ 0 6 years The working capital needed for project B will be released at the end of...

  • Perit Industries has $140,000 to invest. The company is trying to decide between two alternative uses...

    Perit Industries has $140,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project Project A Project B $ 140,000 $ 0 $ 0 $140,000 $ 23,000 $ 67,000 $ 8,500 $ 0 6 years 6 years The working capital needed for project B will be released at the end...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT