Perit Industries has $165,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are:

Respuesta :

The net present value of project A that Perit Industies plans to undertake is $-79,009.91.

What is the net present value?

Net present value is the present value of after-tax cash flows from an investment less the amount invested.

NPV can be calculated using a financial calculator

  • Cash flow in year 0 = -165,000
  • Cash flow in year 1 - 6 = 21,00
  • Cash flow in year 6 = 9500

I = 14%

NPV = $-79,009.91.

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