Wriston Company has $300,000 to invest. The company is trying to - 17420

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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:





  Cost of equipment required



  Working capital investment required



  Annual cash inflows



  Salvage value of equipment in seven years



  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.)


Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.





Calculate net present value for each project. (Negative amount 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

$ correct        

  Project B




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






Solution Description

Please do

Ch13 Q 5.docx
Ch13 Q 5.docx