Question: Tamarisk Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $537,000, has an expected useful life of 15 years and

Tamarisk Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $537,000, has an expected useful life of 15 years and a salvage value of zero, and is expected to increase net annual cash flows by $69,000. Project B will cost $351,000, has an expected useful life of 15 years and a salvage value of zero, and is expected to increase net annual cash flows by $47,000. A discount rate of 8% is appropriate for both projects. Calculate the net present value and profitability index of each project.

Project A Project B Net present value

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