Question #$5$

Idaho Farm Services Company has received two proposals for a new General$-$Purpose

Wheat Harvester. Information provided for each harvester is as follows:

Idaho Farm uses a discount rate of $9\%$ to evaluate both projects.

Note: Factor for the Present Value of an Ordinary Annuity $10$ years @$9\%=6\mathrm{.}41766$

Instructions

$($a$)$ Calculate the net present value of both models.

$($b$)$ Calculate the profitability index for each model.

$($c$)$ Which project should Idaho Farm Services accept?

$($d$)$ What might be some "qualitative" factors to consider?