Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 10%

image text in transcribedimage text in transcribed

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 10% return from its investments.PV of S1 FV of S1, PVA of $i and FVA of $ (Use appropriate factors) from the tables provided.) Project A $(184,325) Proiect B $(149,960) Initial investment Expected net cash flows in: Year 1 Year 2 Year 3 Year 4 Year 5 45,000 50,000 82.295 94,400 7e.ee 33,000 50,000 51,000 68. eee 22,000 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 choose? Complete this question by entering your answers in the tabs below. Required Required For each alternative project compute the net present value. Project A Initial Investment $184,325 Chart Values are Based on: % Year PV Factor Present Value 2 Cash Inflow 45,000 X 50,000 X 80,295 x 94,400 x 70,000 X = Proiect B Initial Investment $149.9601 Cash P Y Year Inflow -Factor Present Value 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 $(184,325) Project B $(149,960) Initial investment Expected net cash flows in: Year 1 Year 2 Year 3 Year 4 Year 5 45,000 50,000 80,295 94,400 70,000 33,000 50,000 51,000 68,000 22,000 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 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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing And Assurance Services A Systematic Approach

Authors: William Messier, Steven Glover, Douglas Prawitt

5th Edition

007333720X, 9780073337203

More Books

Students also viewed these Accounting questions

Question

Describe the factors influencing of performance appraisal.

Answered: 1 week ago

Question

What is the central issue of the situation facing the organization?

Answered: 1 week ago