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		$	(184,325	)			$	(153,960	)
Expected net cash flows in:
Year 1			36,000					44,000
Year 2			54,000					57,000
Year 3			88,295					64,000
Year 4			89,400					78,000
Year 5			67,000					19,000

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 $ 184,325 Initial Investment Chart Values are Based on: 8% Year Cash Inflow X PV Factor Present Value 1 = 2 3 36,000 X 54,000 x 88,295 x 89,400 x 67,000 X 4 5 Present value of cash inflows Present value of cash outflows Net present value Initial Investment Year Present Value 1 Project B $ 153,960 PV Cash Inflow X Factor 44,000 x 57,000 x 64,000 X 78,000 19,000 X 2 = 3 4 5 Present value of cash inflows Present value of cash outflows Net present value For each alternative project compute the profitability index. If the company can only select one project, which should it choose? Profitability Index Choose Choose Numerator: 1 Denominator: Present value of net cash flows Initial investment Profitability Index = Profitability index Project A 0 0 Project B If the company can only select one project, which should it choose