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 10% 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 $ (172, 325) Project B (153, 960) Initial investment Expected net cash flows in year: 53,000 55,000 77.295 80,400 63.000 41.000 51,000 51,000 79,000 27.000 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? Complete this question by entering your answers in the tabs below. Required A Required B For each alternative project compute the net present value. For each alternative project compute the net present value. Project A Initial Investment 5 172,325 Chart Values are Based on: Year Cash Inflow X PV Factor - Present Value Initial Investment Year Cash Inflow Project B 153.960 PV Factor - X Present Value $ Initial Investment Year Cash InllowX 153,960 PU Factor 25 Present Value points eBook Hint Ask Print References Required B > 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 ! Choose Denominator: Choose Numerator: - Profitability Index Profitability index Project A Project BT the company can only select one project, which should it choose? (Required A TABLE B.1" Present Value p=1/(1+ir 1 Periods 1 2 10% 12% 15% O9001 000 000 0.615 09524 OM 09745 025909174 03091 0.829 0.8696 090300612 09426 0946 0.00100390 03734 08573 03417 0.8264 0.792 07561 0.9706 0903 091510. 0 0.368 0896 0.816) 0.79180 .7722 0.7513 0.7118 06575 N910 09233 OSOB 0327072 0269 7 0 DO 06355 0.5718 615 00 00 019 075 207 6 06059 06209 564 0.1972 0.9620 OSO 08375 07007462 0702005661 06302 056 05645 0506 0.4323 09127 0.8706 08131 0.750 0.7107 06051 06227 055 05470 01511204521 02759 0215 5 1 070 06051 OSO 0503 05019 6655 06099 03269 09120 0 164 07026 0641505919 050 05007604 4201 03605 020) 0.9053 0.203 0740106756 0.61 054 050) 0.46320 4224 0.3855 0.3220 0.2472 01061 004 07224 0.64 04 05 0.4751 014209 0 75 07505 0275 02109 7014 06 07971 055 7602567 0169 08787 7730 06810 05006 0510 0 0.4150 0157 62 020 02232 0.162 0.370007519 06611 05 05051 04 0378 0.3405 020202633 0.2045 0.1413 1613 07030 6 619 5651 0. 00 0.0177 0.362 0215202705 02394 01827 01229 07 067205139 0 0335 0337 0919 07519 0210163101069 D 07142 060 05134000 3165 00 2311 1978 1 9 29 O 07002 0140405 0.4155 03 02 0.750202120 0.1799 0110000808 0277 0464 05703 0700157 010 021 02317 0905 01615 0.0703 0215 0.15 0.14 0103700611 00304 7419 5521 04120 01 07314 0.1741 01314 00940075400573 093 0151 070995000 4554 2540181301301 0.09370066 0.0490 0 0 01 0 0 56717 2016 2016 000 00 SEO TABLE B.2 f-(1 + i)" Future Value of 1 Bate Periods 1% 2% 3% 4% 8% 10% 12% 0 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 1 10100 10000 10000 10000 10500 10600 1 000 1 RDD 10000 11000 11200 10201 10404 1.060910816 1.1025 11235 1.169 1.1664 1 2100 125.64 3 102031051210927 1.1249 1.1575 1.1910 1.2250 1.2597 1.2950 1.3310 14049 10406 1125 1.1699 12155 12625 1.310 1305 14115 1.4541 15735 10510 1.1041 1503 12167 12753 13332 1 10 15 16105 11923 1.0615 11252 1941 12651 11401 1.4185 1,5007 1.5869 16771 17716 19738 1071 1107 12299 17199 14071 150.36 1.6052 1.71 1 8280 1947 22107 10829 1.1717 128 165 1.4775 5 938 1.7182 135091992521035 2010 10937 1951 13048 142331551 1.6895 1.8385 1970 2.1719 2.1579 27731 11046 1290 1341914302 16289 17908 1.9672 2.15892 3674 2.5937 71058 1.1157 20341342 153 17103 103 21049 23315 25804 2.8531 34785 12 1.125 1268214258 16010 93 20122 22522 25137 28127 211 3060 11731 12936 1.4685 16651 18856 21329 27195 1 2.4098 20658 10523 14 1695 13195 15126 17317 19799 2.2600 2.5785 29372 3.3417 3.7975 48871 15 11510 359 15580 100 2079 23966 317226025 1.1726 13728 1.6047 1.87302 1829 25404 2.9522 3.4250 39207 505051704 17 1.1843 1.4002 1.6528 19679 2.2920 2.6928 3.15 3 .7000 3276 50545 61660 181.1961 102 17024 202584066 28543 33799 3996047171 5559976900 19 2 051 1568 17525 2106 25270 30256 315165 4.3157 5.1417 6.1159 5 128 12202 145 18061 2191126533 3.2071 2697 5610 5.6044 67275 91467 1.282416406 20 266583364 4.2019 54274 85 8621 1051 17 0001 30 131 131102027332042219 55 75121 100627 11 267 170 290500 14166 1 2011 10661 5516075851 10 576 2010 210 2 1R 2200 2520 2010 0000 10.2857149745 21225 31 591 10510 10000 1.1500 13225 15209 17490 20110 2.3131 26600 10500 35173 40456 45524 52503 6.1528 70757 15 9:7575 10.7513 123755 142315 1665 32.9190 52118 175 7535 TABLE B.3: Present Value of an Annuity of Perles 1 5 9 % 10% 12% 15% 09901 09804 0909 0.9615 09524 0.64 0.0346 09259 0.0174 09091 0.8929 0.8696 19701 19615 1,9135 18861 1894 18334 1.800 178 17991 1795 16901 16257 2018 2019 20 27251 27232 26720 2520 25771 2531324869 2.4018 22832 20020 07 1 3 6290 4651 12 7121 32297 169930373 23550 15 (579744518 1795 124 100 100273 97 1798 1604 33522 5.5 5.5011 5.61725221 5075749173 76562294459 551 41114 37805 5.722 66720 62101 6002157864 55 53801 52064 5.03304.8684 4.5638 4.1604 76517 725 7019157327 0612 6.2008 5977157655 5510 51109067544873 B 1622 761 74151 1078 6.8017 05152 2469 5.0052 7590 5.1282 4.7716 9.6711 S 110 77217 101 7025 6.7101 64177 6166 56502 50188 101 973 2525 7605 054 74987 / 1390 6.3052 11251105751 5.4951 5.9377 5.2317 0. 00 1 511 7902175261 71607 8137 .1964 121111110610 5.4206 327 7 7 130011 12.10 1034 235 1701 10661 55 020 7455 22 135 2011 782 3667 5.62825725 11110 972 161119 35771 067 25061 3109 12561111651 10 584 10 10 1 14 21 121 121 115 73237 5974059542 16 121 0 12 021671105 11 50072 10 275 172150 156 100537196 2014 13 5.120 12 0 11110 0 175 350 120 01 1649 15 1983 2222 925 5 562 1 12 165061 2016 2015