Question
Sweet Acacia Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $429,000, has an expected useful life of 11 years
Sweet Acacia Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $429,000, has an expected useful life of 11 years and a salvage value of zero, and is expected to increase net annual cash flows by $71,000. Project B will cost $269,000, has an expected useful life of 11 years and a salvage value of zero, and is expected to increase net annual cash flows by $47,000. A discount rate of 9% is appropriate for both projects. Click here to view the factor 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 | $enter a dollar amount rounded to 0 decimal places | $enter a dollar amount rounded to 0 decimal places | ||
Profitability index | enter the index rounded to 2 decimal places | enter the index rounded to 2 decimal places |
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