Exercise 11-10 NPV and profitability index LO P3

Exercise 11-10 NPV and profitability index LO P3 Following is information on two alternative investments being considered by Jolee Company. The company requires a 8% 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 A $(185,325) Project B $(152,960) Initial investment Expected net cash flows in year: 1 49,000 37,000 51,000 91,295 87,400 55,000 2 49,000 61,000 67,000 21,000 4 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? Complete this question by entering your answers in the tabs below. Required A Required B For each alternative project compute the net present value. Project A Initial Investment $ 185,325 Chart Values are Based on: PV Factor Present Value Year Cash Inflow 1 2 3 4 5 Project B Initial Investment 152,960 Cash Inflow PV Factor Year Present Value 1 2 3 4 5 Required B