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 $(160,000) Project B $(105,000) Initial investment Expected net cash flows int Year 1 Year 2 Year 3 Year 4 Year 5 40,000 56,000 80,295 90,400 65,000 32,000 50,000 66,000 72,000 24,000 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? For each alternative project compute the net present value. Project A Initial Investment $ 160,000 Chart Values are Based on: Present Value PV Factor = 0.9090] = i = 10% Year Cash Inflow X 1 40,000 x 56,000 3 80,295 x 4 90,400 X 5 65,000 x 2. 0.8264/= 4 0.75131 = 0.6830/= 0.6210= 36,363 46,281 60,326 61,743 40,365 245,078 an $ $ Present value of cash inflows Present value of cash outflows Net present value 245,078 160,000 85,078 $ $ Project B Initial Investment $ 105,000 Year Cash Inflow X PV Factor = 1 32,000 x 0.9090) = 2 50,000 0.82641 Present Value 29,088 245,078 Present value of cash inflows 2 $ Present value of cash outflows 245,078 160,000 85,078 Net present value $ Project B Initial Investment $ 105,000 Year Cash Inflow X PV Factor = 1 32,000 x 0.90901 = 2 50,000 X 0.8264 = 3 66,000 X 0.7513 = 4 72,000 X 0.6830 = 5 24,000 0.6210 = Present Value 29,088 41,320 49,586 49,176 14,904 $ 184,074 4 $ Present value of cash inflows Present value of cash outflows Net present value 184,074 105,000