Perrot Industries has $325,000 to Invest. The company is trying to decide between two alternative uses of the funds. The alternatives follow: Cost of equipment required working capital investment required Annual cash inflows salvage value of equipment in six years Life of the project Project Project A Project B A $270,000 Net Present Value B The working capital needed for project B will be released at the end of six years for Investment elsewhere. Perrot Industries' discount rate is 14%. $ 270,000 54,400 Click here to view Exhibit 10-1 and Exhibit 10-2. to determine the appropriate discount factor(s) using tables. O Project A Ⓒ Project B 67,650 21,200 6 years. 6 years Required: 1-a. Calculate net present value for each project. (Round discount factor(s) to 3 decimal places. Round other Intermediate calculations and final answer to the nearest whole number.) 1-b. Which investment alternative (if elther) would you recommend that the company accept?

Perrot Industries has $325,000 to Invest. The company is trying to decide between two alternative uses of the funds. The alternatives follow: Cost of equipment required working capital investment required Annual cash inflows salvage value of equipment in six years Life of the project Project Project A Project B A $270,000 Net Present Value B The working capital needed for project B will be released at the end of six years for Investment elsewhere. Perrot Industries' discount rate is 14%. $ 270,000 54,400 Click here to view Exhibit 10-1 and Exhibit 10-2. to determine the appropriate discount factor(s) using tables. O Project A Ⓒ Project B 67,650 21,200 6 years. 6 years Required: 1-a. Calculate net present value for each project. (Round discount factor(s) to 3 decimal places. Round other Intermediate calculations and final answer to the nearest whole number.) 1-b. Which investment alternative (if elther) would you recommend that the company accept?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 4CE: Manzer Enterprises is considering two independent investments: A new automated materials handling...

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