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Following is information on two alternative investments being considered by Jolee Company. The company requires a 8% return from its investments. (PV of $1, FV
Following is information on two alternative investments being considered by Jolee Company. The company requires a 8% 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 | $ | (176,325 | ) | $ | (152,960 | ) | ||||
Expected net cash flows in: | ||||||||||
Year 1 | 52,000 | 37,000 | ||||||||
Year 2 | 48,000 | 54,000 | ||||||||
Year 3 | 91,295 | 58,000 | ||||||||
Year 4 | 77,400 | 71,000 | ||||||||
Year 5 | 70,000 | 25,000 | ||||||||
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?
- Required A
- Required B
For each alternative project compute the net present value.
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