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

	Pool	Spa
Initial investment	$ (187,325)	$ (160,960)
Net cash flows in:
Year 1	45,000	29,000
Year 2	53,000	54,000
Year 3	76,295	54,000
Year 4	87,400	66,000
Year 5	64,000	35,000

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
Initial Investment		$187,325
Chart Values are Based on:
i =		%
Year	Cash Inflow	x	PV Factor	=	Present Value
Year 1				=
Year 2				=
Year 3				=
Year 4				=
Year 5				=
Spa
Initial Investment		$160,960
Year	Cash Inflow	x	PV Factor	=	Present Value
Year 1				=
Year 2				=
Year 3				=
Year 4				=
Year 5				=

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					0
Spa					0
If the company can only select one project, which should it choose on the basis of profitability index?