Brief Exercise 24-5 see attach file for table PV

McKnight Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $450,341, has an expected useful life of 11 years, a salvage value of zero, and is expected to increase net annual cash flows by $73,500. Project B will cost $274,383, has an expected useful life of 11 years, a salvage value of zero, and is expected to increase net annual cash flows by $46,800. A discount rate of 9% is appropriate for both projects. Click here to view PV table.

Compute the net present value and profitability index of each project. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round present value answers to 0 decimal places, e.g. 125 and profitability index answers to 2 decimal places, e.g. 15.25. For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

Net present value - Project A	$
Profitability index - Project A
Net present value - Project B	$
Profitability index - Project B

Which project should be accepted based on Net Present Value?

Project BProject A should be accepted.

Which project should be accepted based on profitability index?

Project BProject A should be accepted.

Table3Present Value of 1 (n) 4% 5% Periods 1 0.96154 0.95238 2 0.92456 0.90703 3 0.889 0.86384 4 0.8548 0.8227 5 0.82193 0.78353 6 0.79031 0.74622 7 0.75992 0.71068 8 0.73069 0.67684 9 0.70259 0.64461 10 0.67556 0.61391 11 0.64958 0.58468 12 0.6246 0.55684 13 0.60057 0.53032 14 0.57748 0.50507 15 0.55526 0.48102 16 0.53391 0.45811 17 0.51337 0.4363 18 0.49363 0.41552 19 0.47464 0.39573 20 0.45639 0.37689 6% 7% 8% 9% 10% 11% 12% 0.9434 0.89 0.83962 0.79209 0.74726 0.70496 0.66506 0.62741 0.5919 0.55839 0.52679 0.49697 0.46884 0.4423 0.41727 0.39365 0.37136 0.35034 0.33051 0.3118 0.93458 0.87344 0.8163 0.7629 0.71299 0.66634 0.62275 0.58201 0.54393 0.50835 0.47509 0.44401 0.41496 0.38782 0.36245 0.33873 0.31657 0.29586 0.27615 0.25842 0.92593 0.85734 0.79383 0.73503 0.68058 0.63017 0.58349 0.54027 0.50025 0.46319 0.42888 0.39711 0.3677 0.34046 0.31524 0.29189 0.27027 0.25025 0.23171 0.21455 0.91743 0.84168 0.77218 0.70843 0.64993 0.59627 0.54703 0.50187 0.46043 0.42241 0.38753 0.35554 0.32618 0.29925 0.27454 0.25187 0.23107 0.21199 0.19449 0.17843 0.90909 0.82645 0.75132 0.68301 0.62092 0.56447 0.51316 0.46651 0.4241 0.38554 0.35049 0.31863 0.28966 0.26333 0.23939 0.21763 0.19785 0.17986 0.16351 0.14864 0.9009 0.81162 0.73119 0.65873 0.59345 0.53464 0.48166 0.43393 0.39092 0.35218 0.31728 0.28584 0.25751 0.23199 0.209 0.18829 0.16963 0.15282 0.13768 0.12403 0.89286 0.79719 0.71178 0.63552 0.56743 0.50663 0.45235 0.40388 0.36061 0.32197 0.28748 0.25668 0.22917 0.20462 0.1827 0.16312 0.14564 0.13004 0.11611 0.10367 7% 8% 9% 10% 11% 12% .93458 1.80802 2.62432 3.38721 4.10020 4.76654 5.38929 5.97130 6.51523 7.02358 7.49867 7.94269 8.35765 8.74547 9.10791 9.44665 9.76322 10.05909 .92593 1.78326 2.5771 3.31213 3.99271 4.62288 5.20637 5.74664 6.24689 6.71008 7.13896 7.53608 7.90378 8.24424 8.55948 8.85137 9.12164 9.37189 .91743 1.75911 2.5313 3.23972 3.88965 4.48592 5.03295 5.53482 5.99525 6.41766 6.80519 7.16073 7.4869 7.78615 8.06069 8.31256 8.54363 8.75563 .90909 1.73554 2.48685 3.16986 3.79079 4.35526 4.86842 5.33493 5.75902 6.14457 6.49506 6.81369 7.10336 7.36669 7.60608 7.82371 8.02155 8.20141 .90090 1.71252 2.44371 3.10245 3.6959 4.23054 4.7122 5.14612 5.53705 5.88923 6.20652 6.49236 6.74987 6.98187 7.19087 7.37916 7.54879 7.70162 .89286 1.69005 2.40183 3.03735 3.60478 4.11141 4.56376 4.96764 5.32825 5.65022 5.9377 6.19437 6.42355 6.62817 6.81086 6.97399 7.11963 7.24967 Table4Present Value of an Annuity of 1 (n) 4% 5% 6% Payments 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 .96154 1.88609 2.77509 3.62990 4.45182 5.24214 6.00205 6.73274 7.43533 8.11090 8.76048 9.38507 9.98565 10.56312 11.11839 11.6523 12.16567 12.6593 .95238 1.85941 2.72325 3.54595 4.32948 5.07569 5.78637 6.46321 7.10782 7.72173 8.30641 8.86325 9.39357 9.89864 10.37966 10.83777 11.27407 11.68959 .94340 1.83339 2.67301 3.46511 4.21236 4.91732 5.58238 6.20979 6.80169 7.36009 7.88687 8.38384 8.85268 9.29498 9.71225 10.1059 10.47726 10.8276 19 20 13.13394 12.08532 11.15812 10.3356 9.6036 13.59033 12.46221 11.46992 10.59401 9.81815 8.95012 9.12855 8.36492 8.51356 7.83929 7.96333 7.36578 7.46944 15% 0.86957 0.75614 0.65752 0.57175 0.49718 0.43233 0.37594 0.3269 0.28426 0.24719 0.21494 0.18691 0.16253 0.14133 0.12289 0.10687 0.09293 0.08081 0.07027 0.0611 15% .86957 1.62571 2.28323 2.85498 3.35216 3.78448 4.16042 4.48732 4.77158 5.01877 5.23371 5.42062 5.58315 5.72448 5.84737 5.95424 6.04716 6.12797 6.19823 6.25933