Beacon Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $501,261, has an expected useful life of 13 years, a salvage value of zero, and is expected to increase net annual cash flows by $74,000. Project B will cost $309,857, has an expected useful life of 13 years, a salvage value of zero, and is expected to increase net annual cash flows by $48,300. A discount rate of 9% is appropriate for both projects.
Compute the net present value and profitability index of each project. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to 0 decimal places, e.g. 125 and profitability index answers to 2 decimal places, e.g. 15.25.)
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Project A |
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Project B |
| Net present value |
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$ |
| Profitability index |
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