Project ranking with discounted cash flows Pillmor Company is investigating two mu- tually exclusive capital projects. Project A costs $26,900 and has a useful life of 5 years with no salvage value and an annual cash saving of $10,000. Project B costs $38,000 and has a useful life of 10 years and an annual cash saving of $10,000. The company evaluates capital projects using its 17 percent cost of capital.

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REQUIRED a. Compute the net present value of the terminals. b. Compute the profitability index. c. Find the internal rate of return for each project. d. Rank the projects in order of preference using each of the evaluation methods.