Orkin Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $415,000, has an expected useful life of 11 years, a salvage value of zero, and is expected to increase net annual cash flows by $71,500. Project B will cost $294,000, has an expected useful life of 11 years, a salvage value of zero, and is expected to increase net annual cash flows by $52,000. A discount rate of 10% is appropriate for both projects. Compute the net present value and profitability index of each project. Which project should be accepted? (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round computations and final answer for present value to 0 decimal places, e. g. 125 and profitability index to 2 decimal places, e. g. 10.50. Round computations for Discount Factor to 5 decimal places. ) Net present value - Project A $ ?
Profitability index - Project A ?
Net present value - Project B $ ?
Profitability index - Project B ?
Which project should be accepted A or B ?