You are considering two independent projects, Project A and Project B. The initial cash outlay associated with project A is $50,000 and the initial cash outlay associated with project B is $70,000. The required rate of return on both project is 12 percent. The expected annual free cash flows from each project are as below. Calculate the NPV, PI, and IRR for each project and indicate if the project should be accepted.

year	project A	project B
1	- $50 000	-$ 70 000
2	$12000	$13000
3	$12000	$13000
4	$12000	$13000
5	$12000	$13000
6	$12000	$13000

a) Using financial calculator to calculate the NPV Project A

Inputs: C0= -50,000

C1= 12,000 frequency= 5

I= 12%

Npv= compute

We get, Npv of the Project A as -$6,742.69

Project B

Using financial calculator to calculate the NPV Project B

Inputs: C0= -70,000

C1= 13,000 frequency= 5

I= 12%

Npv= compute

We get, Npv of the Project B as -$23,137.91

B) Using financial calculator to calculate the IRR roject A

Inputs: C0= -50,000

C1= 12,000 frequency= 5

IRR= compute

We get, IRR of the Project A as 6.40%

Project B

Using financial calculator to calculate the IRR roject B

Inputs: C0= -70,000

C1= 13,000 frequency= 5

IRR= compute

We get, IRR of the Project B as -2.42%

C) Profitability index = initial investment + NPV / initial investment

= 50,000 - 6,742.69 / 50,000

= 43,257.31 / 50,000

= 0.8651

Profitability index = initial investment + NPV / initial investment

= 70,000 - 23,137.91 / 70,000

= 46,862.09 / 70,000

= 0.6695

None of the project should be accepted , as both of them have negative NPV.