CHECK WORK FOR INCORRECT ANSWERS

Following is information on two alternative investments being considered by Jolee Company. The company requires a 8% return from its investments. (PV of $1. EV of $1. PVA of S1, and EVA of S1) (Use appropriate factor(s) from the tables provided.) Project A $(176,325) Project B $(152,960) Initial investment Expected net cash flows in: Year 1 Year 2 35.000 52,000 35,295 76,400 61,000 29,000 60,000 65,000 78,000 33,000 Years a. For each alternative project compute the net present value. b. For each alternative project compute the profitability Index. If the company can only select one project, which should it choose? Required A Required B For each alternative project compute the net present value. 176,325 PV = Project A Initial Investment Chart Values are Based on: 8 % Cash Year Inflow 35,000 x 52,000 x 85,295 x 76,400X 61,000 x Factor 0.9259 0.8573 0.7938 0.7350 0.6806 Present Value 32,408 44,582 67,707 56,154 41,517 242,368 $ $ Present value of cash inflows Present value of cash outflows Net present value 242,368 176,325 (66,043) $ Required A Required B For each alternative project compute the profitability Index. If the company can only select one project, which should it choose? Choose Numerator: Profitability Index Choose Denominator l n tial investment Profitability Index Profitability Present value of net cash flows Project 242,368 176,325 137 209,677 of the company can only select one project, which should 152,960 choose? Project A Required A