Accounting Exercise 176

Vista Company is considering two new projects, each requiring an equipment investment of $97,000. Each project will last for three years and produce the following cash inflows: The equipment will have no salvage value at the end of its three-year life. Vista Company uses straight-line depreciation and requires a minimum rate of return of 12%. Present value data are as follows: Compute the net present value of each project. Compute the profitability index of each project. (Round answers to 2 decimal places, e.g. 15.25.) Which project should be selected