Exercise 24-10 (Algo) Net present value, unequal cash flows, and profitability index LO P3

Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 7% 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 X1	Project X2
Initial investment	$ (96,000)	$ (152,000)
Net cash flows in:
Year 1	33,000	72,000
Year 2	43,500	62,000
Year 3	68,500	52,000

a. Compute each projects net present value. b. Compute each projects profitability index. c. If the company can choose only one project, which should it choose on the basis of profitability index?

Complete this question by entering your answers in the tabs below.

Required A

Required B

Required C

Compute each projects net present value. (Round your final answers to the nearest dollar.)

	Net Cash Flows	Present Value of 1 at 7%	Present Value of Net Cash Flows
Project X1
Year 1
Year 2
Year 3
Totals	$0		$0
Initial investment
Net present value			$0
Project X2
Year 1
Year 2
Year 3
Totals	$0		$0
Initial investment
Net present value			$0

Compute each projects profitability index.

Profitability Index
	Numerator:	/	Denominator:	=	Profitability Index
		/		=	Profitability index
Project X1					0
Project X2					0