Oriole Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $ has expected useful life of years and a salvage value of zero, and is expected to increase net annual cash flows by $ Project cost $ has an expected useful life of years and a salvage value of zero, and is expected to increase net annual cash flov $ A discount rate of is appropriate for both projects. Click here to view the factor table.
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 or parentheses eg Round present value answers to decimal places, eg and profitability index ans to decimal places, eg For calculation purposes, use 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?
should be accepted.
Which project should be accepted based on profitability index?
should be accepted.
