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Following is information on two alternative investments being considered by Tiger Co. The company requires a 4% return from its investments. (PV of $1, FV

Following is information on two alternative investments being considered by Tiger Co. The company requires a 4% 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 $ (90,000 ) $ (140,000 )
Expected net cash flows in:
Year 1 30,000 67,500
Year 2 40,500 57,500
Year 3 65,500 47,500

a. Compute each projects net present value. b. Compute each projects profitability index. If the company can choose only one project, which should it choose?

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Compute each project's net present value. (Round your final answers to the nearest dollar.) Net Cash Flows Present Value of 1 at 4% Present Value of Net Cash Flows $ 0 $ Project X1 Year 1 Year 2 Year 3 Totals Amount invested Net present value Project X2 Year 1 Year 2 Year 3 Totals 0 Amount invested Net present value Compute each project's profitability index. If the company can choose only one project, which should it choose? Profitability Index Choose Denominator: Choose Numerator: - Profitability Index Profitability index 0 Project X1 Project X2 If the company can choose only one project, which should it choose? 0

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