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 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.) Project A $(173,325) Project B $(145,960) Initial investment Expected net cash flows in: Year 1 Year 2 Year 3 Year 4 Year 5 50,000 59,000 87,295 82,400 56,000 32,000 47,000 54,000 79,000 25,000 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? Project A Initial Investment $ 173,325 Chart Values are Based on: i = % Year Cash Inflow PV Factor Present Value 1 = 2 = 3 4 = 5 = Project B Initial Investment $ 145,960 PV Factor Year Cash Inflow = Present Value 1 = 2 = 3 = 4 = 5 = For each alternative project compute the profitability index. If the company can only select one proje choose? Profitability Index 1 Choose Denominator: Choose Numerator: Profitability Index Profitability index 1 = 0 Project A Project B If the company can only select one project, which should it choose? 0