Net present value of the projects are:
NPV = -initial cost + ACF(PVIF12%,6),
NPV(A) = $226.9.
Based on NPV creterion Project (A) should be selected because of its higher NPV.
IRR alculation of both projects using Excel function of IRR would be:
Project A = 18.64%
Project B = 23.92 %.
Regular payback periods:
Project A = 4 years + = 4.625 years.
Project B = 3.03 years.
Profitability index (PI):
PI = PV cash inflow/initial costs.