Following is information on two alternative investments being considered by Jolee Company. The company requires a 12% return from its investments. (FV of $1, PV of $1, FVA of $1 and PVA of $1). (Use appropriate factor(s) from the tables provided.)

	Project A					Project B
Initial investment		$	(179,325	)			$	(150,960	)
Expected net cash flows in year:
1			41,000					41,000
2			40,000					50,000
3			74,295					64,000
4			88,400					84,000
5			57,000					26,000

1(a) For each alternative project compute the net present value.

Project A
Initial Investment		$179,325
Chart Values are Based on:
i =		%
Year	Cash Inflow	x	PV factor	=	Present Value
1				=
2				=
3				=
4				=
5				=
Project B
Initial Investment		$150,960
Year	Cash Inflow	x	PV factor	=	Present Value
1				=
2				=
3				=
4				=
5				=

1(b) For each alternative project compute the profitability index.

Profitability Index
	Choose Numerator:	/	Choose Denominator:	=	Profitability Index
		/		=	Profitability index
Project A
Project B

2.

Assume If the company can only select one project, which should it choose?

	Project B
	Project A