Assume the firm can either take Project A or Project B. Project A will require the initial investment of $75,000 and will yield $15,000 at Year 1, $16,000 at Year 2, $21,000 at Year 3, $30,000 at Year 4, $38,000 at Year 5, and $10,500 at Year 6. Project B will require the initial investment of $81,000 and yield $15,000 at Year 1, $16,000 at Year 2, $20,000 at Year 3, $21,000 at Year 4, $30,000 at Year 5, and $43,800 at Year 6. If the interest/discount rate that applies to both project is 10.5%, which of these two projects is a better option if the decision is made based on the Net Present Value (NPV) basis?

Project A

Project B

There is no difference

There is insufficient information to make a decision

Same facts above: what if the decision is made based on the Profitability Index basis?

Project A

Project B

There is no difference

There is insufficient information to make a decision