Use the NPV method to determine whether Root Products should invest in the following projects:

Project A: Costs $290,000 and offers eight annual net cash inflows of $54,000. Root Products requires an annual return of 12% on investments of this nature.

Project B: Costs $390,000 and offers 10 annual net cash inflows of $75,000. Root Products demands an annual return of 10% on investments of this nature.

1. What is the NPV of each project? Assume neither project has a residual value. Round to two decimal places. (Enter any factor amounts to three decimal places, XXXX. Use parentheses or a minus sign for a negative net present value.)

Caclulate the NPV (net present value) of each project. Begin by calculating the NPV of Project A Project A:

What is the maximum acceptable price to pay for each project?

What is the profitability index of each projet ? (Round to two decimal places, XXX)

Use the NPV method to determine whether Root Products should invest in the foliowing projects: - Project A: Costs $290,000 and offers eight annual net cash inflows of $54,000, Root Products requires an annual return of 126% on investrnents of this nature. - Project B: Costs $390,000 and offers 10 annual net cash inflows of $75,000. Root Products demands an annual retum of 10%6 on investments of this nature. (Click the icon to view Present Value of $1 table) Click the icon to view Present Value of Ordinary Annuiby of 31 table) Read the recuirements. Requirement 1. What is the NPV of each project? Assume neither project has a residual value. Round to two decimal places; (Enter any factor amounts to three decimal places, X0. Use parentheses or a minus sign for a negative net present value) Caclulate the NPV (net present value) of each project. Begin by caloulating the NPV of Project A. Requirement 2 . What is the maximum acoeptable price to pay for each project? Requirement 3, What is the profitability index of each project? (Round to two decimal places; XX ) Select the formula, then erter the amounts to calculate the profitabity index of each project Present Value of Ordinary Annuity of \$1 \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline Periods & 1% & 2% & 3% & 4% & 5% & 6% & 7% & 8% & 9% & 10% & 12% & 14% & 15% & 10% & 18% & 20% \\ \hline Period 1 & 0.990 & 0.920 & 0.971 & 0.962 & 0.952 & 0.943 & 0935 & 0.926 & 0917 & 0.909 & 0.893 & 0.877 & 0.870 & 0.862 & 0.847 & 0.833 \\ \hline Pariod 2 & 1.970 & 1.942 & 1.913 & 1.825 & 1.859 & 1.833 & 1.808 & 1.783 & 1,759 & 1736 & 1.690 & 1.647 & 1.626 & 1.605 & 1.566 & 1.528 \\ \hline Period 3 & 2941 & 2824 & 2829 & 2775 & 2723 & 2.673 & 2624 & 257 & 2531 & 2437 & 2402 & 2322 & 2283 & 2246 & 2.174 & 2.106 \\ \hline Poriod 4 & 3.902 & 3.208 & 3.717 & 3.530 & 3.545 & 3.465 & 3.387 & 3.312 & 3240 & 3.170 & 3.037 & 2914 & 2855 & 2798 & 2690 & 2.589 \\ \hline Puriod 5 & 4.853 & 4.713 & 4580 & 4.452 & 4.320 & 4212 & 4. 100 & 3.993 & 3890 & 3.791 & 3.605 & 3.433 & 3.352 & 3.274 & 3.127 & 2.991 \\ \hline & 5.795 & 5.601 & 5.417 & 5.242 & 5.076 & 4.917 & 4.767 & 4.623 & 4.456 & 4.355 & 4.111 & 3.889 & 3.784 & 3.685 & 3.498 & 3.326 \\ \hline Poriod 7 & 6.728 & 6.472 & 6.230 & 6.002 & 5.786 & 5.582 & 5.369 & 5.206 & 5003 & 4.868 & 4.564 & 4.283 & 4.160 & 4.039 & 3.812 & 3.605 \\ \hline Period 8 & 7.652 & 7.325 & 7.020 & 6.733 & 6.463 & 6.210 & 5.971 & 5.747 & 5525 & 5.365 & 4963 & 4.639 & 4.487 & 4.344 & 4.078 & 3.837 \\ \hline Period & 8.565 & 8.162 & 7.785 & 7.435 & 7.108 & 6.802 & 6515 & 6.247 & 5995 & 5.759 & 5.328 & 4.946 & 4.772 & 4.607 & 4.303 & 4.031 \\ \hline Period 10 & 9.471 & 8.983 & 8.530 & 8.111 & 7.722 & 7.360 & & 6.710 & 6.418 & 5.145 & 5.650 & 5.216 & 5.019 & 4.833 & 4.494 & 4.192 \\ \hline Period 11 & 10.368 & 9.787 & 9.253 & 8.760 & 8.306 & 7887 & 7.49 & 7.130 & 6.805 & 6.455 & 5933 & 5.453 & 5.234 & 5.029 & 4.656 & 4.327 \\ \hline Pori & 11.255 & 10.575 & 9.954 & 9.385 & 8.063 & 8.384 & 7.23 & 7536 & 7.161 & 6814 & 6.194 & 5.660 & 5.421 & 5.197 & 4.793 & 4.439 \\ \hline Period 13 & 12.134 & 11,348 & 10.635 & 9.986 & 9.304 & 8253 & 8.35 & 7.904 & 7.48 & 7.100 & 6.424 & 5.842 & 5.583 & 5.342 & 4.910 & 4.533 \\ \hline Period 14 & 13.004 & 12.106 & 11.296 & 10.563 & 9.89 & 0.295 & 8745 & 824 & 7.726 & 7.367 & 6.628 & 6.002 & 5.724 & 5.468 & 5.008 & 4.611 \\ \hline Period 15 & 13.065 & 12849 & 11.938 & 11.118 & 10.380 & 9.712 & 2.106 & 8550 & 1001 & 7606 & 6311 & 6.142 & 5.847 & 5.575 & 5.092 & 4.675 \\ \hline 10 & 14.718 & 13.578 & 12561 & 11.652 & 10.838 & 10.106 & 9.447 & a.ss: & 8313 & 7284 & 6974 & 6.265 & 5.954 & 5.669 & 5.162 & 4.730 \\ \hline 117 & 15.562 & 14.292 & 13,166 & 12.166 & 11.274 & 10.47 & 9.760 & 2.122 & 8.54 & 8.022 & 7.120 & 6.373 & 6.047 & 5.749 & 5.222 & 4.775 \\ \hline Period 18 & 16.398 & 14.992 & 13.754 & 12.659 & 11.690 & 10.828 & 10059 & 932 & 8.756 & 8201 & 7.250 & 6.467 & 6.128 & 5.818 & 5.273 & 4.812 \\ \hline Period 10 & 17.226 & 15.678 & 14.324 & 13.134 & 12.085 & 11.158 & 10.336 & 9.604 & 8.960 & 8.365 & 7.366 & 6.550 & 6.198 & 5.877 & 5.316 & 4.844 \\ \hline Period 20 & 18.046 & 16.351 & 14.877 & 13.590 & 12.462 & 11.470 & 1054 & 9.818 & 9.120 & 8.514 & 7.469 & 6.623 & 6.259 & 5.929 & 5.353 & 4.870 \\ \hline 21 & 18.857 & 17.011 & 15.415 & 14.029 & 12.821 & 11.764 & 10.836 & 10.017 & 9.292 & 8.649 & 7.562 & 6.687 & 6.312 & 5.973 & 5.384 & 4.891 \\ \hline d 22 & 19.660 & 17.658 & 15937 & 14.451 & 13.163 & 12.042 & 11.061 & 10.201 & 9.442 & 872 & 7.645 & 6.743 & 6.359 & 6.011 & 5.410 & 4.909 \\ \hline Poriod 23 & 20.456 & 18.292 & 16.444 & 14.257 & 13.489 & 12.303 & 11.272 & 10.371 & 9.520 & 8.883 & 7.718 & 6.792 & 6.399 & 6.044 & 5.432 & 4.925 \\ \hline Period 24 & 21.243 & 18.914 & 16.936 & 15.247 & 13.799 & 12550 & 11.469 & 10.529 & 9.707 & 8985 & 7.724 & 6.835 & 6.434 & 6.073 & 5.451 & 4.937 \\ \hline 25 & 22.023 & 19.523 & 17.413 & 15.622 & 14.094 & 12.783 & 11.654 & 10.675 & 9.823 & 9.077 & 7.843 & 6.873 & 6.464 & 6.097 & 5.467 & 4.948 \\ \hline Period 26 & 22.795 & 20.121 & 17.877 & 15.983 & 14.375 & 13.003 & 11.826 & 10.810 & 9929 & 9.161 & 7.896 & 6.906 & 6.491 & 6.118 & 5.480 & 4.956 \\ \hline Period 27 & 23.560 & 20.707 & 18.327 & 16.330 & 14.643 & 13.211 & 11.987 & 10.935 & 10.027 & 9.237 & 7.943 & 6.935 & 6.514 & 6.136 & 5.492 & 4.964 \\ \hline Poriod 28 & 24.316 & 21.281 & 18.764 & 16.663 & 14.898 & 13.406 & 12137 & 11.051 & 10.116 & 9.307 & 7.924 & 6.961 & 6.534 & 6.152 & 5.502 & 4.970 \\ \hline Poriod 20 & 25.066 & 21.844 & 19.188 & 16.984 & 15.141 & 13.591 & 12.278 & 11.158 & 10.198 & 9.370 & 8022 & 6.983 & 6.551 & 6.166 & 5.510 & 4.975 \\ \hline Pario & 25.808 & & 19.600 & 17.292 & 15.372 & 13.765 & 12.409 & 11.258 & 10.274 & 9.427 & 8.055 & 7.003 & 6.566 & 6.17 & 5.517 & 4.979 \\ \hline Poriod 40 & 32 & 27.355 & 23.115 & 19.793 & 17.159 & 15.046 & 13.332 & 11.925 & 10.757 & 9.779 & 8.244 & 7,105 & 6.642 & 6.233 & 5.548 & 4.997 \\ \hline Poriod so & 39.196 & 31.424 & 25.730 & 21.482 & 18.256 & 15.762 & 13.801 & 12.233 & 10.962 & 9.915 & 8.304 & 7,133 & 6.661 & 6.246 & 5.554 & 4.999 \\ \hline \end{tabular} Present Value of $1 \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline Periods & 1% & 2% & 3% & 4% & 5% & 6% & 7% & 8% & 9% & 10% & 12% & 14% & 15% & 16% & 18% & 20% \\ \hline Period 1 & 0.990 & 0.980 & 0.971 & 0.962 & 0.952 & 0.943 & 0.935 & 0.926 & 0.917 & 0.909 & 0.893 & 0.877 & 0.870 & 0.862 & 0.847 & 0.833 \\ \hline Period 2 & 0.900 & 0.961 & 0.943 & 0.925 & 0.907 & 0.890 & 0.873 & 0.857 & 0.842 & 0.826 & 0.797 & 0.769 & 0.756 & 0.743 & 0.718 & 0.694 \\ \hline Period 3 & 0.971 & 0.942 & 0.915 & 0.889 & 0.854 & 0.840 & 0.816 & 0.794 & 0.772 & 0.751 & 0.712 & 0.675 & 0.658 & 0.641 & 0.609 & 0.579 \\ \hline Period 4 & 0.961 & 0.924 & 0.888 & 0.855 & 0.823 & 0.792 & 0.763 & 0.735 & 0.708 & 0.683 & 0.636 & 0.592 & 0.572 & 0.552 & 0.516 & 0.482 \\ \hline Period 5 & 0.951 & 0.906 & 0.863 & 0.822 & 0.784 & 0.747 & 0.713 & 0.681 & 0.650 & 0.621 & 0.567 & 0.519 & 0.497 & 0.476 & 0.437 & 0.402 \\ \hline Period 6 & 0.942 & 0.888 & 0.837 & 0.790 & 0.746 & 0.705 & 0.666 & 0.630 & 0.596 & 0.564 & 0.507 & 0.456 & 0.432 & 0.410 & 0.370 & 0.335 \\ \hline Period 7 & 0.933 & 0.871 & 0.813 & 0.760 & 0.711 & 0.665 & 0.623 & 0.583 & 0.547 & 0.513 & 0.452 & 0.400 & 0.376 & 0.354 & 0.314 & 0.279 \\ \hline Period 8 & 0.923 & 0.853 & 0.789 & 0.731 & 0.677 & 0.627 & 0.582 & 0.540 & 0.502 & 0.467 & 0.404 & 0.351 & 0.327 & 0.305 & 0.266 & 0.233 \\ \hline Period 9 & 0.914 & 0.837 & 0.766 & 0.703 & 0.645 & 0.592 & 0.544 & 0.500 & 0.460 & 0.424 & 0.361 & 0.308 & 0.284 & 0.263 & 0.225 & 0.194 \\ \hline Period 10 & 0.905 & 0.820 & 0.744 & 0.676 & 0.614 & 0.558 & 0.508 & 0.463 & 0.422 & 0.386 & 0.322 & 0.270 & 0.247 & 0.227 & 0.191 & 0.162 \\ \hline Period 11 & 896 & 0.804 & 0.722 & 0.650 & .585 & 0.527 & 0.475 & 0.429 & 0.388 & 0.350 & 0.287 & 0.237 & 0.215 & 0.195 & 0.162 & 0.135 \\ \hline Period 12 & 0.887 & 0.788 & 0.701 & 0.625 & 0.557 & 0.497 & 0.444 & 0.397 & 0.356 & 319 & 0.257 & 0.208 & 0.187 & 0.168 & 0.137 & 0.112 \\ \hline Period 13 & 0.879 & 0.773 & 0.681 & 0.601 & 0.530 & 0.469 & 0.415 & 0.368 & 0.326 & 290 & 0.229 & 0.182 & 0.163 & 0.145 & 0.116 & 0.093 \\ \hline Peric & 0.870 & 0.758 & 0.661 & 0.577 & 0.505 & 0.442 & 0.388 & 0.340 & 0.299 & 0.253 & 0.205 & 0.160 & 0.141 & 0.125 & 0.099 & 0.078 \\ \hline Period 15 & 0.861 & 0.743 & 0.642 & 55 & 0.481 & 0.417 & 362 & 0.315 & 0.275 & 239 & 0.183 & 0,140 & 0.123 & 0.108 & 0.084 & 0.065 \\ \hline Peri & 0.853 & 0.728 & 0.623 & 534 & 0.458 & 0.394 & 339 & 292 & 0.252 & 218 & 0.163 & 0.123 & 0.107 & 0.093 & 0.071 & 054 \\ \hline 17 & 0.844 & 0.714 & 0.605 & 0.513 & 0.436 & 0.371 & 0.317 & 0.270 & 0.231 & 0.198 & 0.146 & 0.108 & 0.093 & 0.080 & 2.060 & 0.045 \\ \hline d 18 & 0.836 & 0.700 & 0.587 & 0.494 & 0.416 & 0.350 & 0.296 & 0.250 & 0.212 & 0.180 & 0.130 & 0.095 & 0.081 & 0.069 & 0.051 & 0.038 \\ \hline Period 10 & 0.828 & 0.686 & 0.570 & 0.475 & 0.396 & 0.331 & 0.277 & 0.232 & 0.194 & 0.164 & 0.116 & 0.083 & 0.070 & 0.060 & 0.043 & 0.031 \\ \hline Peri & 10800 & 0.673 & 0.554 & 0.456 & 0.377 & 0.312 & 0.258 & 0.215 & 0.178 & 0.149 & 0.104 & 0.073 & 0.061 & 0.051 & 37 & 0.026 \\ \hline Period 21 & 0.811 & 0.660 & 0.538 & 0.439 & 0.359 & 0.294 & 0.242 & 199 & & 135 & 0.090 & 0.064 & 0.053 & 0.044 & 0.031 & 0.022 \\ \hline Period 22 & 0.803 & 0.647 & 0.522 & 0.422 & 0.342 & 0.278 & 0.226 & 0.184 & 0.150 & 0.123 & 0.083 & 0.056 & 0.046 & 0.038 & 0.026 & 0.018 \\ \hline Period 23 & 0.795 & 0.634 & 0.507 & 0.406 & 0.326 & 0.262 & 0.211 & 0.170 & 0.138 & 0.112 & 0.074 & 0.049 & 0.040 & 0.033 & 0.022 & 0.015 \\ \hline d 24 & 0.788 & 0.622 & 0.492 & 0.390 & 0.310 & 0.247 & 0.197 & 0.158 & 0.126 & 0.102 & 0.066 & 0.043 & 0.035 & 0.028 & 0.019 & 0.013 \\ \hline Period 25 & 0.780 & 0.610 & 0.478 & 0375 & 0.205 & 0.233 & 0.184 & 0.146 & 0.116 & 0.092 & 0.059 & 0.038 & 0.030 & 0.024 & 0.016 & 0.010 \\ \hline Pori & 0.772 & 598 & 0.464 & 361 & 0.28 & 0.220 & 0.172 & 0.135 & 0.106 & 0.084 & 0.053 & 0.033 & 0.026 & 0.021 & 14 & \\ \hline Period 27 & 0.764 & 0.586 & 0.450 & 0.347 & 0.268 & 0.207 & 0.161 & 0.125 & 0.098 & 0.076 & 0.047 & 0.029 & 0.023 & 0.018 & 0.011 & 0.007 \\ \hline d 28 & 0.757 & 0.574 & 0.437 & 0.333 & 0.255 & 0.196 & 0.150 & 0.116 & 0.090 & 0.069 & 0.042 & 0.026 & 0.020 & 0.016 & 0.010 & .006 \\ \hline & 0.749 & 0.563 & 0.424 & 0.321 & 0.243 & 0.185 & 0.141 & 0.107 & 0.082 & 0.063 & 0.037 & 0.022 & 0.017 & 0.014 & 0.008 & 0.005 \\ \hline Period 30 & ln7