Business, 05.05.2020 21:28 kitttimothy55

McKnight Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $400,000, has an expected useful life of 10 years, a salvage value of zero, and is expected to increase net annual cash flows by $70,000. Project B will cost $310,000, has an expected useful life of 10 years, a salvage value of zero, and is expected to increase net annual cash flows by $55,000. A discount rate of 9% is appropriate for both projects. Compute 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 eg -45 or parentheses eg (45). Round present value answers to 0 decimal places, e. g. 125 and profitability index answers to 2 decimal places, e. g. 15.25. For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
Net present value - Project A $
Profitability index - Project A
Net present value - Project B $
Profitability index - Project B
Which project should be accepted based on Net Present Value? Project A or B?
Which project should be accepted based on the profitability index? Project A or B?

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