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Use the NPV method to determine whether Smith Products should invest in the following projects: Project A: Costa $280,000 and offers eight annual net cash inflows of $56,000. Smith Products requires an annual retum of 14% on Investments of this nature. Project : Costs $385.000 and offers 10 annual net cash Intlows of 571,000. Smith Products demands an annual return of 12% 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, Xxxx. 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 or Project A. Project A: Net Cash Annuity PV Factor Present Years Inflow (i=14%, n=8) Value 1 - 8 1 - 8 Present value of annuity 0 Investment Net present value of Project A Calculate the NPV of Project B. Net Cash Present Project B: Years 1 - 10 Present value of annuity Annuity PV Factor (i=12%, n=10) Inflow Value Investment Net present value of Project B Requirement 2. What is the maximum acceptable price to pay for each project? Maximum Acceptable Price Project A Project B 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 Project B = Profitability Index 2% 7% 8% 9% Present Value of Ordinary Annuity of $1 Periods 1% 3% 4% 5% 6% 10% 12% 14% 15% 16% 18% 20% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.870 0.862 0.847 0.833 Period 2 1.970 1.942 1.913 1.886 1.859 1.833 1.8081.7831.759 1.736 1.6901.6471.626 1.6051.566 1.528 Period 3 2.9412.8842.8292.775 2.723 2.673 2.624 2.577 2.531 2.487 2.402 2.322 2.283 2.246 2.174 2.106 Period 4 3.902 3.808 3.717 3.630 3.546 3.465 3.3873.312 3.240 3.170 3.037 2.914 2.855 2.798 2.690 2.589 Period 5 4.853 4.7134.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.605 3.433 3.352 3.2743.127 2.991 Period 6 5.795 5.601 5.417 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.111 3.8893.784 3.685 3.498 3.326 Period 7 6.728 6.472 6.2306.002 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.288 4.160 4.0393.812 3.605 Period 8 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.639 4.487 4.344 4.078 3.837 Period 98.5668.1627.786 7.435 7.108 6.802 6.5156.247 5.9955.759 5.328 4.946 4.772 4.6074.303 4.031 Period 10 9.471 8.9838.530 8.111 7.722 7.360 7.0246.710 6.418 6.145 5.650 5.216 5.019 4.833 4.494 4.192 Period 1110.368 9.7879.2538.760 8.306 7.8877.499 7.139 6.8056.495 5.938 5.453 5.234 5.029 4.656 4.327 Period 12 11.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.1616.814 6.194 5.660 5.421 5.1974.793 4.439 Period 1312.134 11.348 10.635 9.986 9.394 8.853 8.358 7.9047.487 7.103 6.424 5.842 5.583 5.3424.910 4.533 Period 1413.00412.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.3676.628 6.002 5.724 5.468 5.008 4.611 Period 1513.86512.849 11.938 11.11810.380 9.712 9.108 8.559 8.061 7.606 6.811 6.142 5.847 5.575 5.092 4.675 Period 1614.718 13.578 12.561 11.652 10.83810.106 9.447 8.851 8.313 7.8246.9746.265 5.954 5.6695.162 4.730 Period 1715.562 14.292 13.166.12.166 11.274 10.477 9.763 9.122 8.544 8.0227.120 6.373 6.047 5.749 5.222 4.775 Period 1816.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.2017.250 6.467 6.128 5.818 5.273 4.812 Period 1917.22615.678 14.324 13. 13412.08511.15810.336 9.604 8.950 8.3657.366 6.550 6.198 5.8775.3164.844 Period 2018.046 16.351 14.877|13.590 12.462 11.470 10.594 9.818 9.129 8.5147.469 6.623 6.259 5.9295.353 4.870 Period 2118.857 17.011 15.415 14.02912.82111.764 10.836 10.017 9.2928.6497.562 6.687 6.312 5.9735.384 4.891 Period 22 19.660 17.658 15.937 14.451 13.163 12.042 11.061 10.2019.442 8.772 7.645 6.743 6.359 6.011 5.410 4.909 Period 23 20.456 18.292 16.444|14.857 13.48912.303 11.272 10.371 9.580 8.8837.718 6.792 6.399 6.044 5.432 4.925 Period 2421.24318.914 16.936 15.24713.79912.550 11.469 10.529 9.7078.9857.784 6.835 6.434 6.073 5.451 4.937 Period 25 22.023 19.523 17.41315.622 14.09412.783 11.65410.675 9.8239.077 7.843 6.873 6.464 6.097 5.467 4.948 Period 2622.79520.12117.877 15.983 14.37513.003 11.826 10.810 9.929 9.161 7.896 6.906 6.491 6.118 5.480 4.956 Period 2723.560 20.707 18.327 16.33014.643 13.211 11.987|10.93510.027 9.237 7.943 6.935 6.514 6.136 5.492 4.964 Period 2824.31621.28118.764 16.66314.89813.406 12.137 11.051 10.116 9.3077.984 6.961 6.534 6.152 5.502 4.970 Period 2925.06621.84419.188|16.984 15.14113.59112.278 11.158 10.198 9.370 | 8.022 6.983 6.551 6.1665.510 4.975 Period 3025.80822.39619.600 17.292 15.372 13.765 12.409 11.258 10.274 9.427 | 8.055 7.003 6.566 6.1775.517 4.979 Period 4032.83527.355|23.115 19.793 17.159 15.04613.332 11.925 10.757 9.779 | 8.244 7.105 6.642 6.233 5.548 4.997 Period 50 39.196 31.42425.73021.48218.25615.762 13.801 12.233 10.962 9.915 8.304 7.133 6.661 6.246 5.554 4.999 Present Value of $1 Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.870 0.862 0.847 0.833 Period 20.980 0.961 0.943 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.797 0.769 0.756 0.743 0.7180.694 Period 3 0.971 0.942 0.915 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.712 0.675 0.658 0.641 0.609 0.579 Period 4 0.961 0.924 0.888 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.636 0.592 0.572 0.552 0.516 0.482 Period 5 0.951 0.906 0.863 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.567 0.519 0.497 0.476 0.437 0.402 Period 6 0.942 0.888 0.837 0.790 0.746 0.705 0.666 0.630 0.596 0.564 0.507 0.456 0.432 0.410 0.370 0.335 Period 7 0.933 0.871 0.813 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.4520.400 0.376 0.354 0.3140.279 Period 8 0.923 0.853 0.789 0.731 0.677 0.627 0.582 0.540 0.502 0.467 0.4040.351 0.327 0.305 0.266 0.233 Period 9 0.914 0.837 0.766 0.703 0.645 0.592 0.544 0.500 0.460 0.424 0.361 0.308 0.284 0.263 0.225 0.194 Period 0.905 0.820 0.744 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.322 0.270 0.247 0.227 0.191 0.162 10 Period 110.896 0.804 0.722 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.287 0.237 0.215 0.195 0.162 0.135 Period 0.887 0.788 0.701 0.625 0.557 0.4970.444 0.397 0.356 0.319 0.257 0.208 0.187 0.168 0.1370.112 12 Period 0.879 0.773 0.681 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.229 0.182 0.163 0.145 0.116 0.093 13 Period 0.870 0.758 0.661 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.2050.160 0.141 0.125 0.099 0.078 14 Period 0.861 0.743 0.642 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.183 0.140 0.123 0.108 0.084 0.065 15 0.853 0.728 0.623 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.163 0.123 0.107 0.093 0.071 0.054 0.844 0.714 0.605 0.513 0.436 0.371 0.3170.270 0.231 0.198 0.146 0.108 0.093 0.080 0.060 0.045 0.836 0.700 0.587 0.494 0.416 0.350 0.296 0.250 0.212 0.180 0.130 0.095 0.081 0.069 0.051 0.038 Period 16 Period 17 Period 18 Period 19 Period 20 0.828 0.686 0.570 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.116 0.083 0.070 0.060 0.043 0.031 0.820 0.673 0.554 0.456 0.377 0.312 0.258 0.215 0.178 0.149 0.104 0.073 0.061 0.051 0.037 0.026 i 0.811 0.660 0.538 0.439 0.359 0.2940.242 0.199 0.164 0.135 0.093 0.064 0.053 0.044 0.031 0.022 0.803 0.647 0.522 0.422 0.342 0.278 0.226 0.184 0.150 0.123 0.083 0.056 0.046 0.038 0.026 0.018 Period 21 Period 22 Period 23 0.795 0.634 0.507 0.406 0.326 0.262 0.211 0.170 0.138 0.112 0.074 0.049 0.040 0.033 0.022 0.015