Question
Following is information on two alternative investments being considered by Jolee Company. The company requires a 10% return from its investments. (PV of $1, FV
Following is information on two alternative investments being considered by Jolee Company. The company requires a 10% 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 A | Project B | |||||||||
| Initial investment | $ | (184,325 | ) | $ | (156,960 | ) | ||||
| Expected net cash flows in year: | ||||||||||
| 1 | 54,000 | 31,000 | ||||||||
| 2 | 49,000 | 54,000 | ||||||||
| 3 | 85,295 | 51,000 | ||||||||
| 4 | 81,400 | 70,000 | ||||||||
| 5 | 54,000 | 29,000 | ||||||||
a. For each alternative project compute the net present value. b. For each alternative project compute the profitability index. If the company can only select one project, which should it choose?
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Information Systems Control And Audit
Authors: Et Al. Hyo-Jeong Kim, Michael Mannino, Compiled By Koros Press Editorial Board
1st Edition
1781639426, 978-1781639429
