Multi-Task Corporation is considering whether to invest $125,000 in Project A or Project B. The following information is available for both projects:

	Project A	Project B
Cost of equipment needed today		$125,000
Working capital requirement	$125,000
Annual cash operating inflows	$22,000	$30,000
Salvage value in 5 years		$12,500

Multi-Task Corporation requires a rate of return of 14% on its capital projects.

Both projects will last 5 years. If Multi-Task Corporation selects Project A, the working capital investment will be released at the end of the 5-year period.

Required:

1. Calculate the net present value of each project. (6 marks)
2. Which project would you pick based on your net present value calculations? (2 marks)
3. Calculate the profitability index for Projects A and B. (2 marks)