1. What is the NPV of each? project? Assume neither project has a residual value. Round to two decimal places.

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

3. What is the profitability index of each? project? Round to two decimal places.

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

	Project A?: Costs $260,000 and offers seven annual net cash inflows of $53,000. Smith Products requires an annual return of 12?% on investments of this nature.
	Project B?: Costs $375,000 and offers 10 annual net cash inflows of $73,000. Smith Products demands an annual return of 10?% on investments of this nature.

Safari File Edit View History Bookmarks Window Help 83% H, Sat 7:21 PM a mathxl.com Student Login -One SPC MyAccountingLab CH 25 & 26 Homework - ACG2071 Managerial Accounting Mod Do Homework - Alexandra Baker ACG 2071 136 (515) Alexandra Baker 7/2/16 7:21 PM Homework: Homework CH26 Score: 0 of 10 pts E26-24 (similar to) Save 7 of 107 complete) HW Score: 54.17%, 54.17 of 100 pts Question Help Use the NPV method to determine whether Smith Products should invest in the following projects: Project A: Costs $260,000 and offers seven annual net cash inflows of $53,000. Smith Products requires an annual return of 12% on investments of this nature Project B: Costs $375,000 and offers 10 annual net cash inflows of $73,000. Smith Products demands an annual return of 10% on investments of this nature. Click the icon to view the Present Value of $1 table. (Click the icon to view the Present Value of Annuity of $1 table Read the requirements 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, X.XxX. 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 Annuity PV Factor (i=12%, n=7) Net Cash Present Years Inflow Value 1-7 Present value of annuity 0 Investment Net present value of Project A Enter any number in the edit fields and then click Check Answer Clear All Check Answer remaining 2