FundRobot » Investment Banking » Wriston Company has $320,000 to invest.?

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Default wriston company has $320,000 to invest.

Wriston Company has $320,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are as follows:

Cost of equipment required $320,000 $0
Working capital investment required $0 $320,000
Annual cash inflows $89,000 $82,000
Salvage value of equipment in ten years$36,000 $0
Life of the project 10 years 10 years

The working capital needed for project B will be released for investment elsewhere at the end of ten years. Wriston Company uses a 18% discount rate. (Ignore income taxes.)

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, intermediate and final answers to the nearest dollar amount.Omit the "$" sign in your response.)

Net Present Value
Project A$
Project B$

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

Project A
Project B
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