Current Attempt in Progress

Blue Spruce Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $$532,000,$ has

an expected useful life of $14$ years and a salvage value of zero, and is expected to increase net annual cash flows by $$71,000.$ Project $B$

will cost $$351,000,$ has an expected useful life of $14$ years and a salvage value of zero, and is expected to increase net annual cash flows

by $$49,000.$ A discount rate of $8\%$ is appropriate for both projects.

Click here to view the factor table.

Calculate 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 e$.$g$.-45$ or parentheses e$.$g$.(45).$ Round present value answers to $0$ decimal places, e$.$g$.125$ and profitability index

answers to $2$ decimal places, e$.$g$.15\mathrm{.}52.$ For calculation purposes, use $5$ decimal places as displayed in the factor table provided, e$.$g$.1\mathrm{.}25124.)$

Project A

Net present value

Profitability index

Which project should be accepted based on net present value?

should be accepted.

Which project should be accepted based on profitability index?

should be accepted.