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Jonczyk Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $435,000, has an expected useful life of 13 years and
Jonczyk Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $435,000, has an expected useful life of 13 years and a salvage value of zero, and is expected to increase net annual cash flows by $69,000. Project B will cost $331,000, has an expected useful life of 13 years and a salvage value of zero, and is expected to increase net annual cash flows by $54,000. A discount rate of 10% is appropriate for both projects. Click here to view PV table. Calculate 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 e.g.-45 or parentheses e.g. (45). Round present value answers to 0 decimal places, e.g. 125 and profitability index answers to 2 decimal places, e.g. 15.52. For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124.) Project A Project B Net present value $ $ Profitability index Profitability index Which project should be accepted based on net present value? should be accepted. Which project should be accepted based on profitability index? should be accepted. e Textbook and Media
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