Wriston Company has $300,000 to invest. The company is trying to decide between two alternative uses?

Owner101

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 $80,000 $60,000
Salvage value of equipment in seven years $20,000 $0
Life of the project 7 years 7 years

The working capital needed for project B will be released for investment elsewhere at the end of seven years. Wriston Company uses a 20% discount rate. (Ignore income taxes.)

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Owner101 Posts: 2,502	wriston company has $300,000 to invest. the company is trying to decide between two alternative uses 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 $80,000 $60,000 Salvage value of equipment in seven years $20,000 $0 Life of the project 7 years 7 years The working capital needed for project B will be released for investment elsewhere at the end of seven years. Wriston Company uses a 20% discount rate. (Ignore income taxes.)