Following is information on two alternative investments. Beachside Resort is considering building a new pool or spa. 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.)

	Pool	Spa
Initial investment	$ (186,325)	$ (146,960)
Net cash flows in:
Year 1	36,000	37,000
Year 2	44,000	59,000
Year 3	79,295	52,000
Year 4	87,400	65,000
Year 5	66,000	27,000

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

For each investment project compute the net present value.

Pool	Net Cash Flows	x	Present Value	=	Present Value of Net Cash Flows
Year 1				=
Year 2				=
Year 3				=
Year 4				=
Year 5				=
Totals
Spa	Net Cash Flows	x	Present Value	=	Present Value of Net Cash Flows
Year 1				=
Year 2				=
Year 3				=
Year 4				=
Year 5				=
Totals

b. For each investment project compute the profitability index. c. If the company can only select one project, which should it choose on the basis of profitability index?

Profitability Index
	Numerator:	/	Denominator:
		/		=	Profitability index
Pool
Spa
If the company can only select one project, which should it choose on the basis of profitability index?