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Perit Industries has $135,000 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 $135,000 $0 $25,000 $9,800 6 years Project B $0 $135,000 $63,000 $0 6 years The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries' discount rate is 17%. Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the appropriate discount factor(s) using tables Required: a. Calculate net present value for each project. Project A Project B Net present value b. Which investment alternative (if either) would you recommend that the company accept? Project B Project A KONT-JPG EXHIBIT 118-1 Present Vale of 1: Periods 4 T N 9 10% 11% 12% 13% 14% 15% 17% 10% 10% 20 21 2 2 23 24 1 002 003 0043 095 0900 0.917 0 909 0.001 0.893 0.85 0.877 0.870 0362 0855 0347 OM 2 0.025 0.007 00 073 0.57 0.32 0.2 0.812 0797 073 070755 0743 0731 0718 706 604 OB 0672 01 000 0 0 0 0 0 1 0 0 0 0 3 O O OM64 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.593 0 575 0.6580 641 0624 0600 0 593 579 4 OAS 564 055 05 0 4 O 23 0.72 0.753 0512 0.735 0.708 0.683 0.659 0.36 0.613 0 502 0 572 0.552 0534 0516 0.400 0.42 0.467 0.451 0.4 0.0410 5 0.022 0.784 0.747 0.713 0.681 0.650 0.621 0.503 0.567 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0402 03 0.370 0.35 0.341 0.328 6 0.790 0.746 0.705 0.666 0.630 0.506 0.564 0.535 0.507 0.480 0.456 0.432 0.410 0.00 0.370 0.352 0.305 0.319 0.33 0.20 0.275 0.212 7 0.750 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.375 0.354 023 0314 0295 0279 0.263 024 023 0222 0210 8 0 731 0.677 0.627 0 582 0.540 0.502 0.467 0.434 0.404 0376 0.351 0.27 0.305 025 0.250 0.240 0.233 0.218 0 204 0.11 0.17 0.168 0 0.703 0.645 0.592 0.544 0.500 0.460 0.424 0.391 0 361 0.333 0.3 0.24 023 0.243 0.225 0.209 0.194 0.18 0.167 0.155 0.14 0.134 10 0.678 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.295 0.270 0.247 0.227 0.208 0.101 0.176 0.162 0.140 0.17 0.125 0.116 0.107 11 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0215 0.195 0.178 0.162 0.148 0.135 0.125 0.112 0.105 0.004 0.006 12 0.625 0.557 0.407 0.444 0.397 0.356 0310 0.286 0.257 0.231 0.209 0.187 0.16 0.152 0.137 0.124 0.112 0.102 0 092 0.03 0.07 0.060 13 0.601 0.530 0.400 0.415 0.368 0.326 0 290 0 258 0.229 0.204 0.182 0.163 0.145 0.130 0.116 0.104 0.093 0.064 0.075 0.06 0.061 0.055 14 0.577 0.505 0.442 0.388 0.340 0.200 0.263 0232 0.205 0.181 0.160 0.141 0.125 0.11 0.000 0.OBS 0.078 0.000 002 005 00400044 15 0.556 0.481 0.417 0.362 0.315 0.275 0.250 0.200 0.163 0.160 0.140 0.123 0.108 0.005 0.014 0.074 0.005 0.057 0.051 0.045 0.040 0.035 16 0.534 0.458 0.304 0.30 0.292 0.252 0.218 0.18 0.163 0.141 0.123 0.107 0.003 0.001 0.071 0.062 0.054 0.047 0.042 0.000 0.002 0.028 17 0.513 0.436 0.371 0.317 0 270 0.231 0.18 0.170 0.146 0.125 0.108 0.093 0.000 0.000 0.060 0,052 0.045 0.030 0.034 0.000 0.025 0.023 0.404 0.416 0.350 0.200 0.250 0.212 0.10 0.153 0.130 0.111 0.005 0.081 0.069 0.050 0.051 0.044 0.008 0.002 0.02 0.024 0.021 0.018 19 0.475 0.30 0.331 0.277 0.22 0.1040.164 0.138 0.116 0.008 0.083 0.070 0.00 0.051 0.043 0.037 0.001 0.027 0.021 0.02000170014 0.456 0.377 0.312 0.258 0.215 0.178 0.140 0.124 0.104 0.087 0.073 0.061 0.051 0.043 0.037 0.031 0.025 0.022 0.019 0.016 0.014 0.012 0.430 0.250 0.2040242 0.100 0.164 0.135 0.112 0.003 0.077 0.064 0.053 0.044 0.037 0.031 0.028 0.002 0018 0.015 0 013 0011 0000 0.422 0.342 0.278 0.226 0.184 0.150 0.123 0.101 0.083 0.068 0.056 0.046 0.038 0.032 0.026 0.022 0.018 0.015 0.013 0011 0.000 0.007 0.406 0.326 0.22 0.211 0.170 0.138 0.112 0.001 0.074 0.060 0.049 0.040 0.033 0.027 0.022 0.018 0.015 0.012 0010 0.000 0.007 0.006 0.390 0.310 0.082 0.066 0.053 0.043 0.035 0.028 0.023 0.010 0.247 0.197 0.158 0.125 0.102 0.015 0.007 0.005 0.005 0.013 0010 0.008 25 0.375 0.205 0.233 0.14 0.146 0.116 0.002 0.074 0.050 0.047 0.038 0.030 0.024 0.020 0.016 0.013 0.010 0.000 0.007 0.008 0.005 0.004 0.361 0.281 0.220 0.172 0.135 0.106 0.084 0.066 0.053 0.042 0.033 0.025 0.021 0.017 0.014 0.011 0.000 0.007 0.006 0.005 0.004 0.003 0.007 0.008 0.005 0.004 0.003 0.002 27 0.347 0.023 0.268 0.161 0.125 0.000 0.018 0.014 0.011 0.009 0.207 0.078 0.047 0.037 0.029 0.060 0.002 0.333 0.008 0.005 0.004 0.003 0.002 0.255 0,015 0,012 0010 0 DO 0.16 0.150 0.116 0.000 0.060 0.054 0.042 0.033 0.025 0.020 0.037 0.020 0.022 0.017 0.014 0.011 0.008 0.321 0243 0.185 0.141 0 107 0.02 0.003 0.048 0.005 0.005 0.004 0.003 0.002 0.002 0.002 30 0.308 0.231 0.174 0.131 0.000 0.075 0.057 0.044 0.033 0.026 0.020 0,015 0,012 0.000 0.007 0.005 0.004 0.003 0.003 0.002 0.002 0.001 40 0.208 0.142 0.007 0.067 0.046 0.032 0.022 0,015 0,011 0.008 0.005 0.004 0.003 0.002 0.001 0.001 0.001 0.000 0.000 0.000 0.000 0.000 EXHIBIT 118-2 Present Value of an Annuity of $1 in Arrears: +1- Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 20% 25% 0.962 0.952 0.943 0.035 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.362 0.855 0.847 0.840 0.833 0.826 0 20 0813 OROS ORO 1.886 1859 1833 1808 1.783 1.750 1.736 1.713 1.690 1.668 1.547 1.625 1.805 1.586 1 566 1.547 1.529 1509 1492 1.474 1457 1400 3 2.7752.723 2.673 2.6242577 2.531 2.487 2444 2.402 2361 222 223 224 2210 2 174 2 140 2.106 2074 2042 2011 1991 1992 4 3 .630 3.5.46 3.465 3.387 3312 3.240 3.170 3.102 3037 2074 2014 2.855 2.708 2743 2.890 26:39 250 25.00 2494 2 2404 22 5 4.452 432942124 100 3993 3.800 3.791 3.696 3.605 3.517 3433 352 3274 3199 3.127 2058 2001 2.925 2864 203 2745 26 5.2425.0764.917 4.767 4.623 4.486 4.355 4 231 4.111 3999 39 3714 358 359 3.408 3410 3.25 3245 3157 1092 3020 2951 6.002 5.786 5 582 5.399 5.206 5.033 4.868 4.712 4564 4.423 4288 4160 4030 3902 3812 3.706 3.606 3.50 3.415 327 322 3151 8 6.733 8.463 6.210 5.971 5.747 5.535 5.335 5.146 4 968 4.790 4639 4487 434 4 207 4078 3.954 3.837 3.725 3.619 3518 3.421 3309 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.537 5.328 5112 40464772 4.607 4451 4.301 4.163 4.031 3.00$ 379 3.573 3 343 10 8.111 7.722 7360 7.024 6.710 6.418 6.145 5.889 5.650 5.426 5216 5.019 480 4850 4.494 4300 4.192 4.054 3.923 3.799 3.62 3.571 11 8 .760 8.306 7.887 7.499 7.130 6805 6.495 6 207 5.939 5.67 5.453 524 5.029 484 4.656 4.488 427 4.177 4005 1002 377 3856 12 0 385 8.863 8.384 7.943 7.538 7.161 6.814 6.402 6.1945 018 5.660 5.21 5.107 408 4.793 4.511 4.430 4278 4.127 3.985 3851 3.725 13 9.988 9.3048.853 8.358 7904 7.487 7 103 6.750 6.424 6.122 5 842 5.583 542 5.118 4010 4.715 43 432 4203 4053 30123780 14 10.563 0899 9.295 8.745 8.244 7.786 7367 5.082 6.628 6 302 6.002 5.724 5.408 5.229 5.000 4.802 4.511 4.432 4.265 4.108 3. 2 3.824 15 11.118 10.380 9.712 0.1088.559 8.061 7.606 7.191 6.811 6.462 6.142 5.347 5.575 5.304 5.092 4.878 4.675 4.480 4.315 4.153 4001 3.850 16 11.652 10.30 10.106 0.447 8.851 8.313 7.824 7370 6,074 6.604 6.285 5054 5.00 5.405 5.162 4008 4.730 45 4357 4.189 409 387 17 12.166 11 274 10.477 9763 0.122 8544 .022 7.549 7.120 6.729 8.373 6.047 5.749 5.475 5222 4.000 4.775 4.578 4391 4219 4 050 3.010 18 12.650 11.690 10.828 10.050 9.372 3.756 8.201 7.702 7.250 6.840 6.467 6.128 5.818 5.4 5.273 5033 4812 4 GOB 4419 4.243 4.000 3928 10 13.134 12.085 11.158 10,336 9.604 8050 8.365 7830 7366 6.908 6.550 6.108 5.877 8.584 5.316 5,070 4.843 4.635 4442 4263 4007 3042 20 13.500 12.462 11.470 10.594 0.818 9.120 8.514 7.963 7.469 7.025 6.623 6.250 5.929 5.628 5.353 5.101 4.870 4.657 4460 4270 4.110 3.954 21 14.020 12.821 11.764 10.838 10.017 9.292 8.649 8.075 7.562 7.102 6.687 6.312 5.973 5.665 5.384 5.127 4.801 4.675 4.476 4 292 4.121 3.963 22 14.451 13.163 12.042 11.061 10 201 9.442 8.7728.176 7.645 7.170 6.743 6.350 6,011 5.696 5410 5.140 4000 4.690 3.970 4.488 4.302 4.130 14.857 13.489 12.303 11.272 10.371 0.5.80 8.8.83 8 266 7.718 7230 6.792 6.300 6,044 5.7235.432 5.167 4.025 4.703 4.490 4311 4.137 3.075 24 15.247 13.700 12.550 11.460 10.529 0.707 8.985 8.348 7.784 7.283 6.835 6.434 6.073 5.746 5.451 5.182 4.937 4.713 4.507 4318 4.143 3.981 25 15.622 14.004 12.783 11.654 10.675 9.823 9.077 8.422 7.843 7.330 4.948 4.721 4.514 4 323 4.147 3.985 6.873 6.464 6,097 5.766 5.467 5.195 26 15.983 14 375 13.003 11.826 10.810 9.929 0.161 8.488 7.896 7.372 6.906 6.491 6.118 5.783 5.480 5.206 4,956 4.728 4.520 4328 4.151 3.988 4.954 4.734 4.524 4.332 4.154 3.990 27 16.330 10.027 0237 8.548 7.943 7.409 6.935 6.514 6.136 5.798 5.492 5.215 14.643 13.211 11.987 10.935 5.502 5.223 4.070 4.739 4.528 4.335 4.157 3.992 28 16.683 7.984 7.441 6.961 6.534 6.152 5,810 14.89 13.406 12.137 11.051 10.116 9.307 8.602 29 16.984 15.141 13.591 12.278 11.158 10.18 0.370 8.650 8.022 7470 6.983 6.551 6.166 5,820 5510 5.220 4.975 4.743 4.531 4.337 4.159 3.994 30 17.292 15.372 13.765 12.400 11.258 10.274 0.427 8.604 8.055 7.496 7.003 6.566 6.177 5.820 5.517 5.235 4.079 4.746 4,534 4.330 4.160 3.995 40 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.951 8.244 7.634 7.105 6.642 6.233 5.871 5.548 5.258 4.907 4.760 4.544 4.347 4.166 3.990 23

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