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)

 

 Project AProject BInitial investment $(171,325)  $(151,960) Expected net cash flows in:          Year 1  45,000    26,000  Year 2  52,000    43,000  Year 3  74,295    50,000  Year 4  90,400    75,000  Year 5  57,000    28,000  

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?