Ewing Inc. is looking to invest in Project A or Project B.

Ewing Inc. is looking to invest in Project A or Project B. The data surrounding each project is provided below. Ewing’s cost of capital is 11%. Project A This project requires an initial investment of This project requires an initial investment of $167,500. The project will have a life of 6 $137,500. The project will have a life of 4 years. Annual revenues associated with the years. Annual revenues associated with the project will be $130,000 and expenses project will be $107,000 and expenses associated with the project will be $60,000. associated with the project will be $35,000. Calculate the net present value and the present value index for each project using the present value tables provided below. Present Value of $1 (a single sum) at Compound Interest. Present Value of an Annuity of $1 at Compound Interest. Note: – Use a minus sign to indicate a negative NPV. R . If an amount is zero, enter “0”. . Enter the present value index to 2 decimals. Project A Project B Total present value of net cash flow $- X X i Amount to be invested 167,500 J Net present value $ 234,393 x X Present value index: ‘ i Project A 2-40 ‘I Project B J m ‘ Next) ‘