Exercise 24-10 NPV and profitability index LO P3 Following is information on two alternative investments being considered by Jolee Company. The company requires a 12% 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 $ (182, 325) Project B $ (150,960) Initial investment Expected net cash flows in: Year 1 Year 2 Year 3 Year 4 Year 5 45,000 55,000 83,295 80,400 66,000 33,000 60,000 66,000 82,000 36,000 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 $ 182,325 Chart Values are Based on: % Year Cash Inflow X PV Factor = Present Value 1 2 Nce 3 4 III 5 Project B $ 150,960 Initial Investment Year Oash Inflow PV Factor = Present Value 1 2 3 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 Choose Denominator: Choose Numerator: = Profitability Index Profitability index Project A Project B If the company can only select one project, which should it choose