\fPart Five APPLY THE CONCEPTS: Net present value and Present value index Krause Industries is looking to invest in Project A or Project B. The data surrounding each project is provided below. Krause's cost of capital is 11%. Eject A mject B This project requires an initial investment of This project requires an initial investment of $165,000. The project will have a life of 6 $132,500. The project will have a life 01'4 years. Annual revenues associated with the years. Annual revenues associated with the project will be $130,000 and expenses project will be $109,000 and expenses associated with the project will be 535,000. associated with the project will be $60,000. Calculate the net present value and the present value index for each project using the present value tables provided below. Present Value of 51 (a single sum) at Compound Interest. Present Value of an Annuitv of 51 at Compound Interest. Note: 0 Use a minus sign to indicate a negative NPV. 0 If an amount is zero, enter "0". 0 Enter the present value index to 2 decimals. Project A Project B Total present value of net cash flow 401,945 151,998 Amount to be invested 165,000 132,500 Net present value 236,945 19,498 Present value index: Project A 2.44 Project B Based upon net present value, which project has the more favorable profit prospects? Project A V Based upon the present value index, which project is ranked higher? Project A Feedback Check My Work Subtract the expenses from the revenues to determine net cash flow for each year. Since this is an annuity cash flow, use the appropriate table to look up the present value factor for the project life and required rate of return