Please answer the following questions using the new tableSol

Solution

Project A: Year Cash flows PVF @ 7% Present value 1 500000 0.9345794 467289.72 2 600000 0.8734387 524063.24 3 700000 0.8162979 571408.51 4 800000 0.7628952 610316.17 5 900000 0.7129862 641687.56 Present value of cash inflows 2814765 Divide: Initial Investment 1,800,000 Profitability Index 1.56 Project A shall be accepted Project B Year Cash flows PVF @ 12% Present value 1 1150000 0.8928571 1026785.7 2 1050000 0.7971939 837053.57 3 950000 0.7117802 676191.24 4 850000 0.6355181 540190.37 5 750000 0.5674269 425570.14 Present value of cash inflows 3505791 Divide: Initial Investment 2,300,000 Profitability Index 1.52 Project B shall be accepted