Perit Industries has $165,000 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 $165, 000 $ 0
Working capital investment required 0 165, 000
Arnual cash inflows $ 21,000 56, 000 Salvage value of equi㏘ent in six years$ 9, 500 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 Industries' discount rate is 14%. Required : 1. Compute the net present value of Project A
2. Compute the net present value of Project B
3. Which investment alternative (if either) would you recommend that the company accept?