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Perit Industries has $210,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are: Project A $210,000 Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project $ 30,000 $ 9,100 6 years Project B $ $210,000 $ 52,000 $ 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 15%. Click here to view Exhibit 128-1 and Exhibit 12B-2. to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project A. (Enter negative value with a minus sign. Round your final answer to the nearest whole dollar amount.) 2. Compute the net present value of Project B. (Enter negative value 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 B Which investment alternative (if either) would you recommend that the company accept? EXHIBIT 120-1 Present Value of $1: Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 1 17% 18% 0962 0952 0943 0935 0926 0917 0909 0901 0893 0885 0877 08700862 0855 0847 0840 0833 0.826 0820 0813 08060800 19% 20% 21% 22% 23% 24% 25% 2 0925 0907 0890 0.873 08570842 0826 0812 0797 0783 0769 0756 0743 0731 0718 0706 0694 0683 06720661 0650 0640 3 0889 0.864 0840 0.8160794 0772 0751 0731 07120693 06750658 0641 06240609 0593 0579 0564 0551 0537 0524 0512 4 0855 0823 0792 0763 0735 0708 0683 0659 0636 0613059205720552 0534 0516 0499 0482 04670451 0437 0423 0.410 5 0822 0784 0747 0713 0681 0650 0621 0593 0567 0543 0519 0497 0476 0456 0437 0419 0402 0.386 0.370 0355 0.341 0328 0790 0746 0705 0666 0630 0596 0564 0535 0507 0480 0456 0432 0410 0390 0370 0352 0335 0.319 0303 0289 0275 0262 7 0760 07110665 0623 0583 0547 0513 0482 0.452 0.125 0.400 0376 0.354 0333 03140296 0279 0263 0249 0235 0222 0210 8 0731 0677 0627 0582 0540 0502 046704340404 0376 0351 0327 03050285 0266 0249 0 233 0218 0204 0191 01790168 9 0.703 0645 0592 0544 0.500 0.460 0424 0.391 0361 0333 03080284, 0263 0243 0225 0209 0194 01800167 0155 0144 0134 10 0676 0614 0558 0.508 0463 0422 0.386 0.352 0.322 0295 0270 0247 0221 0208 0191 0176 01620149 0137 0126 0116 0107 11 0650 0585 0.527 0.475 0429 0388 03500317 0287 0 261 0237 0215 01950178 0162 0148 0135 0123 01120103 0094 0086 120625 0.557 0.4970444 0.397 0356 0.319 0286 0257 0231 0208 0187 0168 0152 01370124 01120102 0092 0083 0076 0069 130601 0530 0469 0.4150368 0326 0290 0258 0229 0204 0182 0163 014501300116 0104 0093 0084 00750068 0061 0055 14 0.577 0505 0442 0388 0340 0299 0 263 0232 02050181 0160 011 0125 01110099 0088 0078 0069 0062 0055 0049 0044 15 0.555 0481 0417 0.362 0.315 0275 0.239 0209 0183 01600140 0123 00 0095 008 0074 0065 0057 0051 0045 0040 0035 16 0.534 0.458 0394 0339 0292 0252 0218 0.188 0163 01410123 0107 0093 0081 007 0062 0054 0047 0012 0036 0032 0028 17 0513 0436 0371 0317 0270 0231 0198 01700146 01250108 0093 0080 0069 0060 0052 0045 0.039 0034 0030 0026 0023 18 0494 04160350 0.296 0.250 0212 0180 0.153 013001110095 0081 0069 0059 0051 0044 0038 0032 0028 0024 0021 0018 19 0475 0396 0331 0277 0232 0194 0164 0138 0116 0098 0083 007000600051 0043 0037 0031 0027 0023 0020 0017 0044 200456 0377 0312 0258 02150178 0149 0124 01040087 0073 0061 0051 0043 0037 0031 0026 0022 0019 0016 004 0012 21 0.439 0359 0294 0 242 0199 0164 01350112 0.093 0077 0064 0053 0044 0037 0031 0.026 0022 0018 00150013 0011 0009 22 0.422 0342 0278 0226 0.184 01500123 0101 0.0830068 0056 0046 0038 0032 0026 0022 0018 0015 0013 0011 0009 0007 23 0406 0326 0262 0211 01700138 01120091 0.074 0060 0.049 0040 0033 0027 0022 0018 0015 0012 0010 0009 0.007 0006 24 0.390 0310 0247 0197 0158 0126 0102 0082 0066 0053 0043 0035 0028 0.023 0019 0,015 0013 0010 0.008 0.007 0006 0005 25 0.375 0295 0233 0184 01460116 0092 0074 0059 0047 0038 0030 0024 0020 00160013 0010 0.009 0.007 0000 0005 0004 26 0361 0281 0220 0172 01350106 0084 0056 0053 0042 0033 0026 0021 001 0010011 0009 0007 0006 0005 0000 0003 27 0347 0268 0207 0161 0125 0.098 0076 0060 0047 0.037 0029 0023 0.018 0.014 0011 0009 0.007 0.006 0.005 0004 0.003 0002 28 0333 0255 0196 0150 0116 0090 0069 0054 0.042 0.033 0026 0020 0016 0.012 0010 0008 0006 0.005 0004 0.003 0002 0002 29 0321 0243 0185 0141 0107 0082 0063 004 0037 0029 0022 0017 004 0011 0008 0006 0005 0004 0003 0002 0.002 0.002 300308 0231 0174 01310099 0075 0057 0044 0.033 0.026_0020 0015 0012 0009 0007 0005 0004 0000 0000 0002 0.002 0001 40 0208 0142 0097 0067 0046 0032 0.022 0015 0011 0008 0.005 0004 0.003 0002 0.001 0001 0.001 0000 0000 0000 0000 0000 EXHIBIT 128-2 Present Value of an Annuity of S1 in Arrears: 11 - Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 1 0.962 0.952 0.94309350926 0917 0909 0.901 0893 0885 0877 08700862 0855 0.847 08400833 0826 0820 081 0806 0800 15% 16% 17% 18% 19% 20% 21% 22% 23% 20% 25% 2 1886 1859 1833 1808 1783 1759 1736 1713 1690 1668 1647 1626 3 2775 16051585 1566 1547 1528 1509 1492 1474 14571440 2723 2673 2624 2577 2531 2487 2444 2402 2361 2322 2283 2246 2210 2174 210 2106 2074 2012 2011 1981 1952 4 3.630 3546 3.4653387 3.312 3 240 31703102 3037 2974 294 2855 2798 273 2690 2639 2589 2540 2494 2448 2404 2362 5 4452 43294212 4100 39933890 3791 3696 3605 3517 3433 3352 3 274 3199 3127 3058 2991 2926 2864 2803 2745 2689 6 5242 50764917 4767 46234486 4355 4231 411 3998 3889 3784 3685 3589 3498 3410 3326 3245 3167 3092 3020 2951 60025786 5.582 5.3895 206 5033 4868 4712 4564 4423 4288 4160 4039 3922 3812 3706 3.605 3508 3.416 3327 3242 3161 8 6733 6.463 6210 5971 5747 5535 5335 5146 4968 4799 4639 4487 4344 4207 4078 3954 3837 3.726 3619 3518 3421 3329 9 7435 7108 6.802 6515 6 247 5.995 5759 5537 5328 5132 49464m2 4607 4451 4303 4163 4031 3905 3786 3673 3566 3463 10 8111 7722 7360 7024 6.710 6.418 6145 5889 5.650 5 426 5216 5019 4833 4659 4494 4339 4192 4054 3923 3799 3682 3571 11 8760 8306 78877499 7139 6805 6495 6 207 5938 5687 5453 5234 5029 48364656 4486 4327 417 4035 3902 3776 3656 129.385 8863 8384 7943 7536 7161 6814 6492 6194 59185660 5421, 5197 4988 4793 4611 4439 4278 4127 3985 3851 3725 139.986 9.394 8853 8.358 7904 74877103 6.750 6.424 61225842 5583 5342 5118 4910 4715 4.533 4362 4203 4053 3912 3780 14 10.563 98999295 8745 8244 77867367 6.982 6 628 6302 6002 5724 5468 5229 5008 4802 4611 4432 4265 4108 3.962 3824 15 11118 10.3809712 9108 8559 8061 7606 7191 6811 6462 61425847 5575 5324 5092 4876 4675 4489 4315 4153 4001 3859 16 11652 10 838 101069.447 8851 8.313 7824 7379 69746604 6 265 5954 5668 5.405 5162 4938 4730 4536 4357 4189 4033 3887 17 12 166 11274 10477 9763 9122 8.544 802275497120 6729 6373 6047 5749 5.475 5222 4990 4775 4576 4391 4219 4059 3910 18 12 659 11690 10828 10.0599372.8756 8201 7702 7250 6840 6 467 6128 5818 5534 5273 5033 48124608 4419 42434080 3928 19 13134 12.085 11158 10336 9.604 8.950 8365 78397366 6938 6550 6.198 5877 5584 5316 5070 4843 4635 4442 4263 4097 3942 20 13.590 12.462 11470105949818 9129 8514 7963 7469 7025 6.623 6.259 5929 5628 5353 5101 4.870 4657 4460 4279 41103954 21 14029 12821 11764 10.836 10.017 9292 8649 8075 7562 7102 6687 6.312 5973 5665 5 384 5127 4891 4675 4476 4292 4121 3963 22 14.451 13163 12042 11061 10 201 9442 8772 81767645 7170 6743 6359 60115696 5410 5149 4 909 4690 4488 4302 41303970 23 14857 13.489 12 303 11272 10.371 9.580 8883 8266 7718 7230 6.792 6 399 6.044 5723 5432 5 167 4925 4703 4499 4311 41373976 24 15 247 13 799 12.550 11.469 10.529 9707 8985 8348 7784 7283 6835 6.434 6073 5746 5.451 5182 4937 4713 4507 4318 41433981 25 15622 14.094 12 783 11.654 10675 9823 9077 8.42278437330 6.87364646097 5766 5467 5.195 4948 4721 454 4323 41473985 328 41513988 26 15983 14375 13.003 11826 10 810 9929 9161 8488 7896 7372 6906 6491 6118 5783 5 480 5 206 4 956 4728 4520 7409 6.935 6514 6136 5798 5.492 5 215 4964 4734 4524 4332 41543990 27 16 330 14643 13.211 11987 10 935 10.027 9237 8548 7943 28 16 663 1898 13.406 12137 1105110116 9.307 8 602 7984 7441 69616534 6152 5810 5502 5223 4970 4719 4578 4335 4157992 29 16.984 15 141 1591 12 278 11158 10198 9.370 8650 8.022 7470 6983 6551 6166 5820 5.510 5229 4975 443 4531 4337 41593994 30 17292 15 372 13765 12.409 11258 10 274 9427 8694 8055 7496 7003 6.566 61775829 5517 5235 4979 476 4534 4339 41603995 40 19 793 17159 15046 1333211925 10757 9779 8.951 8244 7634 71056642 6 233 5871 5548 5 258 4 997 4760 4544 4341 4166 3999 Wendell's Donut Shoppe is investigating the purchase of a new $33,000 donut-making machine. The new machine would permit the company to reduce the amount of part-time help needed, at a cost savings of $5,700 per year. In addition, the new machine would allow the company to produce one new style of donut, resulting in the sale of 1,100 dozen more donuts each year. The company realizes a contribution margin of $2.60 per dozen donuts sold. The new machine would have a six-year useful life. Click here to view Exhibit 128-1 and Exhibit 12B-2. to determine the appropriate discount factor(s) using tables. Required: 1. What would be the total annual cash inflows associated with the new machine for capital budgeting purposes? 2. What discount factor should be used to compute the new machine's Internal rate of return? (Round your answer to 3 decimal places.) 3. What is the new machine's internal rate of return? (Round your final answer to the nearest whole percentage. 4. In addition to the data given previously, assume that the machine will have a $10,855 salvage value at the end of six years. Under these conditions, what is the internal rate of return? (Hint: You may find it helpful to use the net present value approach in the discount rate that will cause the net present value to be closest to zero.) (Round your final answer to the nearest whole percentage. 1. Annual cash inflows Discount factor Internal rate of return 4. Internal rate of return Mattice Corporation is considering investing $870,000 in a project. The life of the project would be 6 years. The project would require additional working capital of $37,000, which would be released for use elsewhere at the end of the project. The annual net cash inflows would be $184,000. The salvage value of the assets used in the project would be $47.000. The company uses a discount rate! of 13%. (Ignore income taxes.) Click here to view Exhibit.128.1 and Exhibit 128-2 to determine the appropriate discount factor(s) using the tables provided) Required: Compute the net present value of the project. (Negative amount should be indicated by a minus sign. Round your intermediate calculations and final answer to the nearest whole dollar amount.) Net present value

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