Perit industries has $190,000 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 $ 190,000 $ 0 working capital investment required $ 0 $ 190,000 annual cash inflows $ 28,000 $ 48,000 salvage value of equipment in six years $ 8,900 $ 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 15%. click here to view exhibit 12b-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?
Answers: 3
Business, 22.06.2019 08:00
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Suppose that two firms produce differentiated products and compete in prices. as in class, the two firms are located at two ends of a line one mile apart. consumers are evenly distributed along the line. the firms have identical marginal cost, $60. firm b produces a product with value $110 to consumers.firm a (located at 0 on the unit line) produces a higher quality product with value $120 to consumers. the cost of travel are directly related to the distance a consumer travels to purchase a good. if a consumerhas to travel a mile to purchase a good, the incur a cost of $20. if they have to travel x fraction of a mile, they incur a cost of $20x. (a) write down the expressions for how much a consumer at location d would value the products sold by firms a and b, if they set prices p_{a} and p_{b} ? (b) based on your expressions in (a), how much will be demanded from each firm if prices p_{a} and p_{b} are set? (c) what are the nash equilibrium prices?
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Business, 22.06.2019 16:30
Which of the following has the largest impact on opportunity cost
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Perit industries has $190,000 to invest. the company is trying to decide between two alternative use...
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