#3

Following is information on two alternative investments projects being considered by Tiger Company. The company requires a 12% return from its investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Project X1 $ (80,000) Project X2 $ (120,000) Initial investment Net cash flows in: Year 1 Year 2 Year 3 25,000 35,500 60,500 60,000 50,000 40,000 a. Compute each project's net present value. b. Compute each project's profitability index. If the company can choose only one project, which should it choose on the basis of profitability index? Complete this question by entering your answers in the tabs below. Required A Required B Compute each project's net present value. Required A Required B Compute each project's net present value. Net Cash Flows Present Value of 1 at 12% Present Value of Net Cash Flows Project X1 Year 1 Year 2 Year 3 Totals Initial investment Net present value Project X2 Year 1 Year 2 Year 3 Totals Initial investment Net present value Required A Required B Compute each project's profitability index. If the company can choose only one project, which should it choose on the basis of profitability inde: Profitability Index Numerator: 1 Denominator: = Profitability index Project X 1 Project X2 If the company can choose only one project, which should it choose on the basis of profitability index