Question $3$ of $5$

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Cullumber Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $$519,000,$ has an expected useful life of $12$ years and a salvage value of zero, and is expected to increase net annual cash flows by $$71,600.$ Project B will cost $$367,000,$ has an expected useful life of $12$ years and a salvage value of zero, and is expected to increase net annual cash flows by $$51,800.$ A discount rate of $7\%$ is appropriate for both projects. Click here to view PV table.

Compute 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 eg $-45$ or parentheses eg $(45).$ Round present value answers to $0$ decimal places, eg$.125$ and profitability index answers to $2$ decimal places, e$.$g$.15\mathrm{.}25.$ For calculation purposes, use $5$ decimal places as displayed in the factor table provided.$)$

Net present value $-$ Project A $ $$

Profitability index $-$ Project $A$

Net present value$-$Project B $,$$ $$

Profitability index $-$ Project $B$

Which project should be accepted based on Net Present Value?

$$ should be accepted.