%E26-25 (similar to) Question Help Use the NPV method to determine whether McKnight Products should invest in the following projects: Project A: Costs $260.000 and offers seven annual net cash inflows of $54,000. McKnight Products requires an annual return of 12% on investments of this nature. Project B: Costs $395,000 and offers 9 annual net cash inflows of $74,000. McKnight Products demands an annual return of 10% on investments of this nature. (Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary 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. Net Cash Present Project A: Years Annuity PV Factor (i=12%, n=7) 4.564 Inflow 54,000 Value 1 - 7 Present value of annuity $ $ 246,456 0 Investment (260,000) (13,544) Net present value of Project A Calculate the NPV of Project B. Net Cash Present Project B: Years 1-9 Present value of annuity Annuity PV Factor (i=10%, n=9) 5.759 Inflow 74,000 Value $ $ 426,166 0 Investment (395,000) 31,166 Net present value of Project B Requirement 2. What is the maximum acceptable price to pay for each project? Maximum Acceptable Price Project A $ 246,456 Project B $ 426,166 Requirement 3. What is the profitability index of each project? (Round to two decimal places, X.XX.) Select the formula, then enter the amounts to calculate the profitability index of each project. Present value of net cash inflows Initial investment Project A = Profitability Index =