Calculate net present value for each project negative

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Reference no: EM13572044

Wriston Company has $300,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are as follows:

	A		B
Cost of equipment required	$	300,000	$	0
Working capital investment required	$	0	$	300,000
Annual cash inflows	$	56,000	$	48,000
Salvage value of equipment in nine years	$	14,000	$	0
Life of the project		9 years		9 years

The working capital needed for project B will be released for investment elsewhere at the end of nine years. Wriston Company uses a 10% discount rate. (Ignore income taxes.)

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. (Negative amounts should be indicated by a minus sign.Leave no cells blank - be certain to enter "0" wherever required. Round discount factor(s) to 3 decimal places, other intermediate calculations and final answers to the nearest whole dollar.)

	Net Present Value
Project A	$
Project B	$

Which investment alternative (if either) would you recommend that the company accept?

	Project B
	Project A

Reference no: EM13572044

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