Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $473,200, has an expected useful life of 13 years, a salvage value of zero, and is expected to increase net annual cash flows by $70,500. Project B will cost $299,406, has an expected useful life of 13 years, a salvage value of zero, and is expected to increase net annual cash flows by $46,700. A discount rate of 9% is appropriate for both projects.
Compute the net present value and profitability index of each project
| Net present value - Project A |
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$ |
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| Profitability index - Project A |
|
|
|
| Net present value - Project B |
|
$ |
|
| Profitability index - Project B |
|
|