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.) Initial investment Expected net cash flows in: Year 1 Year 2 Year 3 Year 4 Year 5 Project A $(183, 325) 43,000 50,000 86,295 78,400 59,000 Project B $(146,960) 36,000 57,000 59,000 78,000 34,000 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. $ Project A Initial Investment 183,325 Chart Values are based on: % Year Cash Inflow PV Factor 1 X Present Value 2 3 4 6 Initial Investment Year Cash Inflow Project B 146,960 PV Factor = Present Value 1 2 3 4 5