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 6% 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 $(184,325) Project B $(151,960) Initial investment Expected net cash flows in: Year 1 Year 2 Year 3 Year 4 Year 5 53,000 55,00 72, 295 76,488 59,00 42,000 61,280 49,00 70,880 26,000 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 S 184,325 Chart Values are Based on: % Year Cash Inflow PV Factor = Present Value 1 = 2 = 3 = 4 5 = Initial Investment Project B S 151,960 PV Factor Year Cash Inflow = Present Value 1 2 = 3 1111 4 5 Required A Required B For each alternative project compute the profitability index. If the company can only select one project, which should it choose? Profitability Index 1 Choose Denominator: Choose Numerator: = Profitability Index Profitability index 1 = Project A Project B If the company can only select one project, which should it choose