Question
Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 6% return from its investments. (PV of $1,
Following is information on two alternative investment projects being considered by Tiger Company. The company requires a 6% 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 | $ (84,000) | $ (128,000) |
| Net cash flows in: | ||
| Year 1 | 27,000 | 63,000 |
| Year 2 | 37,500 | 53,000 |
| Year 3 | 62,500 | 43,000 |
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?
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Enterprise Information Systems A Pattern Based Approach
Authors: Cheryl Dunn, J. Owen Cherrington, Anita Hollander
3rd Edition
0072404299, 978-0072404296
