Use the NPV method to determine whether Smith Products should invest in the following projects:

-Project A: Costs $ 265,000 and offers seven annual net cash inflows of $ 57,000. Smith Products requires an annual return of 12% on investments of this nature.

-Project B: Costs $ 400,000 and offers 9 annual net cash inflows of $ 70,000. Smith Products demands an annual return of 10% on investments of this nature.

Requirement 1. What is the NPV of each project? Assume neither project has a residual value. Round to two decimal places. (Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sign for a negative net present value.)

Calculate the NPV (net present value) of each project.

Begin by calculating the NPV of Project A.

Calculate the NPV of Project B.

Requirement 2. What is the maximum acceptable price to pay for each project?

Requirement 3. What is the profitability index of each project? (Round to two decimal places, X.XX.) Select the formula, then enter the amounts to calculate the profitability index of each project.

Reference Periods 1% 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 0.905 0.896 0.887 0.879 0.870 0.861 0.853 0.844 0.836 0.828 0.820 0.811 0.803 0.795 0.788 0.780 0.772 0.764 2% 0.980 0.961 0.942 0.924 0.906 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 0.728 0.714 3% 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 0.766 0.744 0.722 0.701 0.681 0.661 0.642 0.623 0.605 0.587 0.570 0.554 0.538 0.522 0.507 0.492 0.478 0.464 0.450 0.437 0.424 0.412 4% 0.962 0.925 0.889 0.855 0.822 0.790 0.760 0.731 0.703 0.676 0.650 0.625 0.601 0.577 0.555 0.534 0.513 0.494 0.475 0.456 | 0.439 0.422 0.406 0.390 0.375 0.361 0.347 0.333 0.321 0.308 Present Value of $1 5% 6% 7% 8% 9% 0.952 0.943 0.935 0.926 0.917 0.907 0.890 0.873 0.857 0.842 0.864 | 0.840 0.816 0.794 0.772 0.823 0.792 0.763 0.735 0.708 0.784 0.747 0.713 0.681 | 0.650 0.746 0.705 0.666 0.630 0.596 0.711 0.665 0.623 0.583 | 0.547 0.677 0.627 0.5820.540 0.502 0.645 0.592 0.544 0.500 0.460 0.614 0.558 0.508 0.463 | 0.422 0.585 0.527 0.475 0.429 0.388 0.557 | 0.497 0.444 0.397 0.356 0.530 0.469 0.415 0.368 0.326 0.505 0.442 0.388 0.340 0.299 0.481 0.417 0.362 0.315 0.275 0.458 0.394 0.339 0.292 0.252 0.436 0.371 0.317 0.270 0.231 0.416 0.350 0.296 0.250 0.212 0.396 0.331 0.277 0.232 0.194 0.377 0.312 0.258 0.215 0.178 0.359 0.294 0.242 0.199 | 0.164 0.342 0.278 0.226 0.184 0.150 0.326 0.262 0.211 0.170 0.138 0.310 0.247 0.197 0.158 0.126 0.295 0.233 | 0.184 0.146 0.116 0.281 0.220 0.172 0.135 | 0.106 0.268 0.207 0.161 0.125 0.098 0.255 0.1960.150 0.116 0.090 0.243 0.185 0.141 0.107 0.082 0.231 0.174 0.131 0.099 0.075 10% 12% 0.909 0.893 0.826 0.797 0.751 0.712 0.683 0.636 0.621 0.567 0.564 0.507 0.513 | 0.452 0.467 0.404 0.424 0.361 0.386 0.322 0.350 0.287 0.319 0.257 0.290 0.229 0.263 0.205 0.239 0.183 0.218 0.163 0.198 0.146 0.180 0.130 0.164 0.116 0.149 0.104 0.135 0.093 0.123 0.083 0.112 0.074 0.1020.066 0.092 0.059 0.084 0.053 0.076 0.047 0.069 0.042 0.063 0.037 0.057 0.033 14% 0.877 0.769 0.675 0.592 0.519 0.456 0.400 0.351 0.308 0.270 0.237 0.208 0.182 0.160 0.140 0.123 0.108 0.095 0.083 0.073 0.064 0.056 0.049 0.043 0.038 0.033 15% 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 0.215 0.187 0.163 0.141 0.123 0.107 0.093 0.081 0.070 0.061 0.053 0.046 0.040 0.035 0.030 16% 18% 20% 0.862 0.847 0.833 0.743 0.7180.694 0.641 0.609 0.579 0.552 0.516 0.482 0.476 0.437 0.402 0.410 0.370 0.335 0.354 0.314 0.279 0.305 0.266 0.233 0.263 0.225 0.194 0.227 0.191 0.162 0.1950.162 0.135 0.168 0.137 0.112 0.145 0.116 0.093 0.125 0.099 0.078 0.108 0.084 0.065 0.093 0.071 0.054 0.080 | 0.060 0.045 | 0.069 0.051 0.038 0.060 0.043 0.031 0.051 0.037 0.026 0.044 0.031 0.022 0.038 0.026 0.018 0.033 0.022 0.015 0.028 0.019 0.013 0.024 0.016 0.010 0.021 0.014 0.009 0.018 | 0.011 0.007 0.0160.010 0.006 0.014 0.008 0.005 0.012 0.007 0.004 0.700 0.686 0.673 0.660 0.647 0.634 0.622 0.610 0.598 0.586 0.574 0.563 0.552 0.029 0.757 0.026 0.023 0.020 0.017 0.015 0.026 0.022 0.020 0.749 0.742 Print Done i Reference Periods 16% 0.862 1.605 2246 2.246 2.798 3.274 3.685 4.039 4.344 4.607 4.833 Present Value of Ordinary Annuity of $1 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 1.970 1.942 | 1.913 1.886 1.859 1.833 | 1.808 1.783 1.759 1.736 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 3.902 3.808 3.717 3.630 3.546 3.465 3.387 | 3.312 3.240 3.170 4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 5.795 5.601 5.417 5.242 5.076 4.917 4.767 4.623 4.486 4.355 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.995 5.759 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 10.368 9.787 9.253 8.760 8.306 7.887 7.499 | 7.139 6.805 6.495 11.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 | 7.161 6.814 12.134 11.348 10.635 9.986 9.394 8.853 8.358 7.904 7.487 7.103 13.004 12.106 11.296 10.563 | 9.899 9.295 8.745 8.244 | 7.786 7.367 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.061 7.606 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.313 7.824 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.022 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 | 8.201 17.226 15.678 14.324 13.134 | 12.085 | 11.158 10.336 9.604 8.950 8.365 18.046 16.351 14.877 13.590 12.462 11.470 10.594 | 9.818 | 9.129 8.514 18.857 17.011 15.415 14.029 12.821 11.764 10.836 10.017 9.292 8.649 19.660 17.658 15.937 14.451 13.163 12.042 11.061 10.201 9.442 8.772 20.456 18.292 16.444 16.444 14.857 13.489 12.303 11.272 10.371 9.580 8.883 21.243 18.914 16.936 15.247 13.799 12.550 11.469 10.529 9.707 8.985 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.823 9.077 22.795 20.121 17.877 15.983 14.375 13.003 11.826 10.810 9.929 9.161 23.560 20.707 18.327 16.330 14.643 13.211 11.987 10.935 10.027 9.237 24.316 21.281 18.764 16.663 14.898 13.406 12.137 11.051 10.116 9.307 25.066 21.844 19.188 16.984 15.141 13.591 12.278 11.158 10.1989.370 25.808 22.396 19.600 17.292 15.372 13.765 12.409 11.258 10.274 9.427 12% 14% 0.893 0.877 1.6901.647 2.402 2.322 3.037 2.914 3.605 3.433 4.111 3.889 4.564 4.288 4.968 4.639 5.328 4.946 5.650 5.216 5.938 5.453 6.194 5.660 6.424 5.842 6.628 6.002 6.811 6.142 6.974 6.265 7.120 6.373 7.250 6.467 7.366 6.550 7.469 6.623 7.562 6.687 7.645 6.743 7.718 6.792 7.784 6.835 7.843 6.873 4.533 15% 0.870 1.626 2.283 2.855 3.352 3.784 4.160 4.487 4.772 5.019 5.234 5.421 5.583 5.724 5.847 5.954 6.047 6.128 6.198 6.259 6.312 6.359 6.399 6.434 6.464 6.491 6.514 6.534 6.551 6.566 5.029 5.197 5.342 5.468 5.575 5.669 5.749 5.818 5.877 5.929 18% 20% 0.847 0.833 1.566 1.528 247 2.174 2.106 2.690 2.589 3.127 | 2.991 3.498 3.326 3.812 3.605 4.078 3.837 4.303 4.031 4.494 4.192 4.656 4.327 4.793 4.439 4.910 5.008 4.611 5.092 4.675 5.162 4.730 5.222 4.775 5.273 4.812 5.316 4.844 5.353 4.870 5.384 4.891 5.410 4.909 5.432 4.925 5.451 4.937 5.467 4.948 5.480 4.956 5.492 4.964 5.502 4.970 5.510 4.975 5.517 4.979 5.973 7.896 6.906 7.943 6.935 7.984 6.961 8.022 6.983 8.055 | 7.003 6.011 6.044 6.073 6.097 6.118 | 6.136 6.152 6.166 6.177 Print Done Present Project A: Years Net Cash Inflow Annuity PV Factor (i=12%, n=7) Value 1-7 Present value of annuity 0 Investment Net present value of Project A Net Cash Present Annuity PV Factor (i=10%, n=9) Inflow Value Project B: Years 1-9 Present value of annuity 0 Investment Net present value of Project B Maximum Acceptable Price Project A Project B Select the formula, then enter the amounts to calculate the profitability index of each project. = Profitability Index Project A Project B Select the formula, then enter the amounts to calculate the profitability index of each project. = Profitability Index Project A Project B Average amount invested Average annual operating income Initial investment Present value of net cash inflows Choose from it fields and then continue to the next