Dobbs Company is considering two different, mutually exclusive capital expenditu

Question

Dobbs Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $396,400, has an expected useful life of 10 years, a salvage value of zero, and is expected to increase net annual cash flows by $72,600. Project B will cost $267,500, has an expected useful life of 10 years, a salvage value of zero, and is expected to increase net annual cash flows by $57,600. A discount rate of 8% is appropriate for both projects.

Compute the net present value of each project. (Round PV factor to 5 decimal places, e.g. 1.25356 and final answers to 0 decimal places, e.g. $15,255.)

Which project should be accepted? (                 )

Fill in the blanks. Thank you

Explanation / Answer

A 90751.90956

B 119000.68860

Project B should be accepted

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