Use the NPV method to determine whether Root Products should invest in the following projects:
Project A: Costs $290,000 and offers eight annual net cash inflows of $54,000. Root Products requires an annual return of 12% on investments of this nature.
Project B: Costs $390,000 and offers 10 annual net cash inflows of $75,000. Root Products demands an annual return of 10% on investments of this nature.
What is the NPV of each project? Assume neither project has a residual value. Round to two decimal places. (Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sign for a negative net present value.)
What is the maximum acceptable price to pay for each project? Annuity PV Factor (i=12%, n=8) Annuity PV Factor (i=10%, n=10) Present Value Present Value Requirement
3. What is the profitability index of each project? (Round to two decimal places, XXX) Select the formula, then enter the amounts to calculate the profitability index of each project. Profitability Index
Present Value of Ordinary Annuity of $1 \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline Penods & 1% & 2% & 3% & 4% & 5% & 0% & 7% & 8% & 96 & 10s & 12% & 14% & 15% & 10% & 18% & 20% \\ \hline Period 1 & 0.990 & 0.960 & 0.971 & 0962 & 0.952 & 0.943 & 0.935 & 0.926 & 0.917 & 0.909 & 0.893 & 0.877 & 0.870 & 0.862 & 0.847 & 0.833 \\ \hline Pariod 2 & 1.970 & 1.942 & 1.913 & 1.826 & 1.859 & 1.833 & 1.808 & 1.783 & 1.759 & 1.736 & 1.690 & 1.647 & 1.626 & 1.605 & 1.566 & 1.528 \\ \hline Period 3 & 2941 & 2834 & 2829 & 2775 & 2723 & 2673 & 2624 & 257 & 2531 & 2487 & 2402 & 2.322 & 2.283 & 2246 & 2.174 & 2.106 \\ \hline Poriod 4 & 3.902 & 3.808 & 3.717 & 3.630 & 3.545 & 3.465 & 3.387 & 3.312 & 3240 & 3.170 & 3.037 & 2914 & 2855 & 2798 & 2690 & 2.589 \\ \hline Period 5 & 4.853 & 4.713 & 4560 & 4.452 & 4.320 & 4.212 & 4. 100 & 3993 & 3890 & 3.791 & 3.605 & 3.433 & 3.352 & 3.274 & 3.127 & 2.991 \\ \hline Pariod 6 & 5.795 & 5.601 & 5.417 & 5.242 & 5.076 & 4.917 & 4.767 & 4.623 & 4 
