Question: Angel Company is considering two new projects, each requiring an investment of P300,000. Each project will last for 5 years and will earn a net income on the following projects Year Project A Proiect B 1P 48,000 P 50,000 250,000 50,000 3 44,000 50,000 4 45,000 50,000 5 48.000 50.000 P235.000 P250.000 BE Project A has salvage value of 10,000 at the end of its five-year life. However, it needs some minor repairs at the end of its life amounting to P3,000. But project B has no savage value but according to the management accountant it can still be sold approximately in the amount of P5,000 at the end of 5 years without any necessary repairs needed. Angel Company uses straight-line depreciation and requires a minimum rate of return of 12% Present value data are as follows: 4 Present Value of 1 Present Value of an Annuity of 1 Period 12% Period 12% 1.8931.893 2.797 2 1.690 3.712 3 2.402 .636 4 5 543 5 6 441 6 7 410 7 8 402 8 9 378 10 341 10 2.905 3.487 3.899 4.332 4.668 4.993 5.398 Instructions (a) Compute the net present value of each project. (b) Compute the profitability index of each project. (c) Which project should be selected? Why? Skip Question. Comment . Flag