Question: Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $ 418,000 $ 36,500 1 47,500 19,700 2 58,500 14,000
Consider the following two mutually exclusive projects:
| Year | Cash Flow (A) | Cash Flow (B) | ||
| 0 | $ | 418,000 | $ | 36,500 |
| 1 | 47,500 | 19,700 | ||
| 2 | 58,500 | 14,000 | ||
| 3 | 75,500 | 15,100 | ||
| 4 | 533,000 | 11,900 |
The required return on these investments is 14 percent.
b. What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
| Net present value | ||
| Project A | $ | |
| Project B | $ |
d. What is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.)
| Profitability index | |
| Project A | |
| Project B |
|
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