Vaughn Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $$508,000,$ has an expected useful life of $14$ years and a salvage value of zero, and is expected to increase net annual cash flows by $$72,000.$ Project B will cost $$308,000,$ has an expected useful life of $14$ years and a salvage value of zero, and is expected to increase net annual cash flows by $$46,000.$ A discount rate of $9\%$ is appropriate for both projects.

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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$.15\mathrm{.}52.$ For calculation purposes, use $5$ decimal places as displayed in the factor table provided, e$.$g$.1\mathrm{.}25124.)$

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

Which project should be accepted based on net present value?

select a project

Project A Project B should be accepted.

Which project should be accepted based on profitability index?

select a project

Project A Project B should be accepted.