Lambert Manufacturing has $100,000 to invest in either Project A or Project B. The following data are available on these projects (Ignore income taxes.): Project AProject BCost of equipment needed now$100,000 $60,000 Working capital investment needed now - $40,000 Annual cash operating inflows$40,000 $35,000 Salvage value of equipment in 6 years$10,000 - Refer to Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. Both projects will have a useful life of 6 years and the total cost approach to net present value analysis. At the end of 6 years, the working capital investment will be released for use elsewhere. Lambert's required rate of return is 14%.The net present value of Project B is:

Project B's net present value is $54,326.82.

Explanation:

The net present value of Project B can be calculated as follows:

Step 1: Calculation of the Project B's present value of annual cash operating inflows

This can be calculated using the formula for calculating the present value of an ordinary annuity as follows:

PVC_B = P * ((1 - (1 / (1 + r))^n) / r) …………………………………. (1)

Where;

PVC_B = Present value of Project B's present value of annual cash operating inflows = ?

P = Project B's annual cash operating inflows = $35,000

r = required rate of return = 14%, or 0.14

n = number of years = 6

Substitute the values into equation (1), we have:

PVC_B = $35,000 * ((1 - (1 / (1 + 0.14))^6) / 0.14)

PVC_B = $136,103.36

Step 2: Calculation of the Project's B working capital investment released for use elsewhere

This can be calculated using the formula for calculating the present value as follows:

PVW_B = W_B / (1 + r)^n (2)

PVW_B = Present value of Project B's working capital investment released for use elsewhere = ?

W_B = Project's B working capital investment released for use elsewhere = $40,000

r = required rate of return = 14%, or 0.14

n = number of years = 6

Substitute the values into equation (2), we have:

PVW_B = $40,000 / (1 + 0.14)^6

PVW_B = $18,223.46

Step 3: Calculation of the Project B's net present value

Project B's net present value = PVC_B - Cost of Project's B equipment - Project B's Working capital investment + PVW_B

Project B's net present value = $136,103.36 - $60,000 - $40,000 + $18,223.46 

Project B's net present value = $54,326.82

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lbc corporation makes and sells a product called product wz. each unit of product wz requires 4.1 hours of direct labor at the rate of $20.00 per direct labor-hour. management would like you to prepare a direct labor budget for june. the company plans to sell 28,000 units of product wz in june. the finished goods inventories o