Calculate NPVequal annual cash inflows (Learning Objective 4) Use the NPV method to determine whether 5alon Products

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Calculate NPV—equal annual cash inflows (Learning Objective 4)

Use the NPV method to determine whether 5alon Products should invest in the fol¬ lowing projects:

• Project A: Costs $272,000 and offers eight annual net cash inflows of $60,000.

Salon Products requires an annual return of 14% on projects like A.

• Project B: Costs $380,000 and offers nine annual net cash inflows of $70,000.

Salon Products demands an annual return of 12% on investments of this nature.

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

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