90.2K

Verified Solution

Link Copied!

EXTRA CREDIT PRACTICE PROBLEMS FOR FINAL EX. O Saved Help Save & Exit Perit Industries has $120,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives 14 are: 1 Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project Project Projects $120,000 $ 0 $0 $120,000 $ 22.000 $70,000 $ 8,800 6 years 6 years points The working capital needed for project will be released at the end of six years for investment elsewhere. Perit Industries' discount Print rate is 14% References Click here to view Exhibit 130-1 and Exhibit 139-2. to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project A. (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 (inter negative values 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? 1 Net present value project A 2. Net present value project 3 Which investment alternative if they would you recommend that the company accept? Information on four Investment proposals is given below. 15 Investment required Present value of cash inflows Net present value Life of the project Investment Proposal c $(150,000) $(200,000) $(180,000) $(2,600,000) 211,500 275,600 274,100 3, 470,500 $ 61,500 $ 75,600 $ 94,100 $ 870,500 5 years 7 years 6 year 6 years points eBook Print Required: 1. Compute the project profitability index for each investment proposal. (Round your answers to 2 decimal places.) 2. Rank the proposals in terms of preference. References Investment Proposal Project Profitability Index Rank Preference B D

Answer & Explanation Solved by verified expert

See Answer